This is a quick guide on dumping your debt.

Debt comes in many forms, such as mortgages, credit cards, loans and ways you’ve never imagined.

Nowadays, people find new, innovative ways to get themselves buried in it everyday.

It’s an art really. This brings me to my first point:

How We View Debt

Debt is not our friend. In fact, it’s the enemy.

Racking up debt by taking out loans and making minimum payments on credit card bills can ruin your life. Fortunately there are solutions to this problem.

First off, if you are not currently in debt, I want to say congratulations, because you are the minority! It’s almost as if being debt free is unnatural or at least unAmerican.

Here is a little secret: It is very possible to live a wonderful life and be debt free. You don’t NEED that new stereo that you had to pay for on credit. You don’t NEED that $30,000 car at a “low payment” of $300 per month just because it’s prettier than the $5000 car you could save cash for. There is a simple rule for things like this:

If you can’t afford to buy it with cash, you can’t afford it.

Related: The Complete Guide to Paying Off Your Debt

This may seem simple, but before credit cards, people actually saved to buy big ticket items. Weird, huh?

Some people are actually responsible enough to use credit cards and pay them off in full every month.

But if you have ever had issues with paying your payments, I highly suggest you cut them up and stop using them.

So what is the solution for ridding yourself of the demon of debt?

Read on to find out the most simple solution for tackling all of the typical debt people accumulate.

The Debt Snowball

The debt snowball is the main tool you will use to get out of basic debt like:

  • Credit cards
  • Student loans
  • Hospital bills
  • Car payments
  • Personal loans

…and ultimately your home mortgage.

It’s a simple 6 step process:

  1. Write down every debt.
  2. Sort them from smallest monthly payment to largest.
  3. Pay the minimum on every one, except the smallest payment.
  4. Put all extra money toward the smallest payment.
  5. Once the smallest is paid off, put that payment and all extra cash towards the next smallest payment.
  6. Repeat until debt free.

Every time you pay off a debt, you add that payment and all of the other payments for the debts you have paid off to the next smallest debt.

This is a highly effective method that I personally used to become debt free.

Once you begin to pay off the small debts, you will see progress and that can be very motivating.

The small amounts will add up quickly when you add them to the next payment, which is why it’s referred to as a debt “snowball”.

It keeps growing until it is unstoppable.

Usually once you make it to your mortgage, or whatever you largest debt is, you will have so much money going towards it that it will be paid off quicker than you every thought possible.

There is also a method called the debt avalanche. You can learn about the differences between the debt snowball and the debt avalanche here.

This article covers the basics for dumping debt. For more articles on strategies and reduction solutions, head over to the “pay off your debt” page.

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