2005年11月01日

Debt snowball method

Debt snowball method[Finance]

Debt_snowball_method


The debt-snowball method of debt repayment applies best to revolving accounts such as credit cards--* List all debts in ascending order from smallest balance to largest.
* Commit to pay the minimum payment on every debt.
* Determine how much extra can be applied towards the smallest debt.
* Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off.
* Then, add the old minimum payment from the first debt to the extra amount, and apply the new sum to the second smallest debt. Repeat until all debts are paid in full.Some financial advisors suggest a variation of this strategy in which the debts are listed in descending order according to the interest rate that is charged. The idea is to reduce the debts that are growing the fastest in order to minimize the total amount of interest paid. Others recommend paying the debts that cause the most worry or stress.Ultimately, the best choice depends on the situation and outlook of the debtor. Those who are unsure of their ability to stick with the plan may want to pay the smallest debt first, because the thrill of eliminating an entire balance sooner may encourage them to continue. If an interest-free loan from a sibling or parent has gone unpaid for so long that it threatens to destroy a relationship, it would be a logical first choice for repayment.

quote Wikipedia - Article - History - License:GFDL





Finance Renewal 2005.11.01 



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