If you take a strict look at the numbers, there is an accurate way in which you can pay off debt. If you consider it mathematically, the best way to minimize your dollars is by focusing on paying down debts which have the highest rates of interest. If you follow the logic, in case you have a credit card bill of $1000 which has got an interest rate of 25%, you should tackle it before you handle a student loan of $7000 which has got an interest rate of 6.5%.

There is another method called avalanche method which minimizes the interest amount which you’re paying and this can save you thousands, depending on the total debt amount you have. However, it is often said by experts that the avalanche method is not always the most appropriate method for someone who is drowning in debt. This is because it doesn’t generate the motivation which is needed among the debtors to stay headstrong about paying back their debts. Researchers, in fact, found out that the opposite method or the snowball method generates more motivation among the debtors to get out of debt.

Dave Ramsey also recommends using the snowball method as you first target the smallest debt first, irrespective of the interest rate that it carries. If you wish to start it off, you have to first make a list of all the debts, from the smallest debt amount to the largest. Keep paying off the minimum balance on each loan which you took from Northcash, apart from the one that carries the smallest balance. Dedicate as much as money that you can towards that debt until you’re able to repay it. Once it’s done, move on to the next debt. As you watch your debts disappear one by one, you tend to gain momentum because you would watch the snowball to grow bigger and bigger.

When you focus on paying down the account which carries the smallest balance, this has got a rather powerful impact on the sense of progress of people and hence their motivation is to continue paying off their debts. Dave Ramsey prefers this method of getting out of debt and compares it to being on diet. If you start to lose weight during the first week, wouldn’t you be more motivated to continue thereafter? On the contrary, if you keep controlling whatever you eat without any such progress, you tend to give up sooner.

In order to get fired up, you need quick wins. When you begin off with the debt snowball method and within the initial few days, you pay off few debts, this lights up the fire within you. Besides paying off and organizing the bill in a definite order, the most vital factor which makes the debt snowball method so popular is its intensity. You will keep saying to yourself that you can get out of debt and you’re successfully repaying your debts.

So, if you actually wish to remain debt free and adopt a financially healthy life, you would first need to trigger off your high interest debts. Don’t worry too much about concentrating on the numbers as this will buckle you down soon. Question yourself what will inspire you to get going. Keep up the motivation in your mind so as to repay your debts on time.