Baby Step 2: Pay Off All Debt (Except the House) Using the Debt
Next, it’s time to pay off the cars, the credit cards and the student loans. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one. Attack that one with a vengeance. Once it's gone, take that payment and put it toward the second-smallest debt, making minimum payments on the rest. That's what's called the debt snowball method, and you’ll use it to knock out your debts one by one.
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The snowball debt method
With this method, you pay off your debts from the smallest balance to the largest balance, regardless of interest rates.
When you pay the smallest debts first, you start to clear your low debts away very quickly. Doing this feels empowering. Once you've paid off a debt, yo...
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The debt snowball is another method made popular by Dave Ramsey. It is simply a way of paying off your debt from the smallest balance to the largest.
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