Use a Debt Elimination Plan to Kill Debt

If you’re like most people who are drowning in debt, then you are more than ready to find a good debt elimination plan and kill that debt off for good.
The big financial gurus like Suze Orman, Dave Ramsey and David Bach, use the snowball method to help people get out of debt quickly. This is the method of transferring payments from balance to balance as they are paid off until all debts are killed…and hopefully for good.
These three gurus each have a unique way of setting up the snowball.
Balance Snowball – Dave Ramsey’s Method

• Debts are paid off by balance in ascending order, lowest to highest
• Starter payment (extra money in addition to minimum payment) goes to the lowest balance.
• Payment amounts move from debt to debt, snowballing as it goes until all debt is zeroed out.

This method is good for keeping you incentive going as the smaller balances will get knocked out pretty quickly. Psychologically this debt elimination plan is very satisfying.
Interest Rate Snowball – Suze Orman’s Method

• Debts are in descending order by interest rate, highest to lowest.
• $10 is adding to the minimum payment for all debts
• The snowball starter is adding the the first debt (highest interest rate) and then snowballs from there until everything is paid off.

You will most likely pay the least interest rate using this method, but seeing that first debt paid off may take many months and this can be discouraging.
DOLP System Snowball – David Bach
The DOLP (done on last payment) system uses the number of months left to determine the order of payoff. The debt with the least number of months goes first and so on.

• To determine the number of months, divide the balance by the minimum payments.
• Add the starter amount to the first debt and snowball until all debts are gone.

Because balance and interest rates aren’t figured into the order, you might end up paying the most interest on this debt elimination plan. However, like Dave Ramsey’s plan you’ll see debts paid off quickly at the beginning.
All three of these plans are good ones and they will work to get you out of debt if you stick with it. Pick the one that appeals to you the most and just get started!