By using the debt snowball method, you can pay off all your debts in a substantially shorter time, getting you debt-free quicker and paying less interest overall.
- How the Debt Snowball Method Works @ DaveRamsey.com
Excerpt: But when you ditch the small debt first, you see progress. That one debt is out of your life forever. Soon the second debt will follow, then the next. When you see that the plan is working, you’ll stick to it. By sticking to it, you’ll eventually succeed in becoming debt-free! By the time you are paying on the bigger debts, you have so much more cash freed up from paying off the earlier debts that it creates a “debt snowball” effect. You are putting hundreds of dollars a month on your bills instead of a few bucks here and there. You build momentum, which changes your behavior and helps you get out of debt and stay that way.
- Debt-snowball method @ Wikipedia
Excerpt: In theory, by the time the final debts are reached, the extra amount paid toward the larger debts will grow quickly, similar to a snowball rolling downhill gathering more snow (thus the name). The theory works as much on human psychology; by paying the smaller debts first, the individual, couple, or family sees fewer bills as more individual debts are paid off, thus giving ongoing positive feedback on their progress towards eliminating their debt.