Many people imagine that they could solve their financial problems if they only made more money. They wish for a raise or a better job and believe that would help them overcome issues they are facing. The truth is that they would likely end up with more issues if they had more money. The behavior of the spender needs to change rather than the income stream that they generate. Making more money is good if you use that cash to pay off existing credit, but it does not help if you continue to charge and spend beyond your means.
The first step in reduction plan is to track all of your consumer debt. This includes all credit cards, student loans and any vehicle loans. You do not need to include a home mortgage at this phase. After you have accounted for the source of your different debts, arrange them from smallest to largest. The trick is to begin paying off the smallest ones first while continuing to make the minimum payments on your other debts. You must attack the smallest debt as aggressively as possible. After that debt has been paid off, you can take the money you were throwing towards that debt and apply it to the next debt on your list. Motivation comes from seeing the smaller debts eliminated and this motivation is more important than any interest rates that may be involved.
An effective debt reduction plan must work to change the behavior of the spender. The snowball method of debt reduction works because it plays upon human nature. We naturally like to build upon our successes and seeing debts eliminated provides the needed incentive to keep going. Practitioners of this debt reduction plan will find themselves debt free and will gain the needed skills to remain debt free for the remainder of their financial lives.