If you have a lot of debt, you might be interested in different approaches to pay it all off. One of the most popular methods is called the roll-down method, or the snowball method. This method involves paying off your most expensive debt first and rolling down the list until you are debt free.
List Debt
Start by listing your outstanding debt. You will want to list your outstanding balances in a spreadsheet layout. You can do this on paper or on a computer. In each row, list a name for the account, the minimum payment, the interest rate and the total balance.
Sort Accounts
Sort your list by interest rate. You want the highest interest rate at the top because it is the most expensive debt to maintain, regardless of the minimum payment and balance.
Start Paying
While paying the minimum balance on each account, pay everything you possibly can into the account with the highest interest rate every month. It is best to set a minimum goal that you are accountable for sticking with.
Roll Down
Once the account with the highest balance is paid off, pay the entire amount you were dedicating to the first account to the second account in addition to the minimum payment you were already paying on that account. You can already make a higher payment than required, so continue to do so to shrink your debt quickly.
Debt Free
Follow the same pattern once the second account is paid Keep paying more and more into each subsequent account until all of your debt is clear. Optimally, close accounts as you go to ensure you do not add any new debt and hinder your goal of being debt free.
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