Why it is advisable to wipe away debt problems with debt snowflakes

So far the Dave Ramsey model for paying off debt has been regarded as one of the best method to do away with the same. This method of paying off debt is called snowballing. The crux of this methodology of debt payment is that the individual needs to chalk out the debts that he needs to payback from the smallest amount to the biggest amount. Thereafter, the individual must assiduously pay back the lender to whom he owes the smallest amount of money as much as possible. At the same time the other lenders must also be given back the least amount of repayment to the other debtors. Based on this particular model of debt repayment, the snowflake model was devised in the Debt Support Group at iVillage.

The literal meaning of the word snowflake is parts and bits of a snowball. In this model the big snowball is being compared with the all your accumulated debt and all this debt should be paid back by the debtor in small bits just like the snowflakes. One extremely positive side of this model that every debtor needs to remember is that by paying off early he can also save up a lot interest that he might have to pay to the lender. Moreover, a compound interest is charged on the amount of money that that borrower owes to the lender. Everyone should take up the initiative to pay off as early as possible to avoid paying the financial institution extra portion of your hard earned money. But remember one thing, each financial institution has a predetermined amount of payments that a borrower can make in a month. Try to scale down the level of the compound interest by paying the excess funds that you have accumulated in a particular month.

Another important that the debtor must remember is that they should not spend the extra money that they have gathered by buying some other things. They should have a detailed record of all the excess funds they could gather by various means. It can be so that you have earned a handsome amount of incentive this month because of all the hard work that you have put in or might be so that you have sold of some of the unnecessary things that you really didn’t need anymore. But do not dare to spend this fund somewhere else. Everybody is expected to have this much amount of understanding, maturity and self restrain which will be ultimately beneficial for them.

If you are worried about the accumulated amount of debt that you need to pay back, then you might also consider taking up a part time job. This job will allow you to earn some extra bucks that you can totally dedicate for giving back the installments following the snowflake method. This might turn out to be a bit strenuous for you, but just remember the old saying, “every cloud has a silver lining”. You might end up feeling totally exhausted but your hard work will help you to curb all the tensions and worries that are haunting you right now.

Another thing that every individual must remember while following the snowflake model is that they should stop using their credit card immediately. This model is designed to facilitate the debtor out of their troubles; thereby they should no longer indulge in any such practices which have the potential of further stretching their problem. Of course they can use it if they absolutely need it for maintaining the basic things they require in their life but not any luxury items.

The basic thing that every individual must remember is that they have to learn, understand the value of self constrain, then only scientifically designed models such as Snowball or Snowflake will be successful. The bottom line of the snowball methodology is that to pay back the debts slowly and whenever there is an opportunity to pay back as much as possible. It is undoubtedly the best method to repay the liabilities that you have slowly yet steadily and move towards a better future.

Knowing the different startegies and tactics to wipe away debt takes years of learning and understanding all the moving parts in that process.  An online finance MBA is a great start to getting the knowledge necessary to operate in this arena.

Bio : Jonny is a financial advisor with easyfinance.com. He is adept in offering helpful tips on financial and economic problems for making life hassle-free. He offers specialized services related to budgeting, loans, and home equity.

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