How to Make Debt Vanish

It's virtually impossible to get out of debt if you don't know what you owe. As a starting point for your debt journey, make a list of all your outstanding debts. This includes debts that you owe jointly and debts that belong to you individually. When making your list, make note of the current balance, the interest rate and the minimum monthly payment.

Once you know what you owe, you and your spouse can decide how you want to pay them off. You can rank your debts from highest to lowest by interest rate or by the balance. Another way would be to separate "good" debt from "bad" debt. Credit cards are usually considered bad debts since there's no property or collateral attached. A low-interest student loan would be an example of a good debt. There's no right or wrong way to rank your debt. If you want to save money on interest, you can start with the higher-interest debts first. Knocking a few smaller bills off the list right away can give you some added motivation to keep going.

Snowballing your debt can help keep your momentum going and get you out of debt faster. Choose one debt on your list to be your first target. You want to put as much money towards this debt each month as possible. For all your other debts, just keep paying the minimums. Once you get the first debt wiped out, you take the money you were using for that payment and roll it over to the next debt on the list. As you pay off each debt, keep rolling over the payments. By the time you get to the last debt on your list, all your smaller payments will have snowballed into one large payment.

Paying down debt quickly doesn't mean you have to make large payments at once. Sending smaller payments or snowflakes on top of your regular payment can bring your balance down that much faster. Finding snowflakes just means paying attention to your spending. For example, let's say you budget $60 for gas one week but only spend $45. You've got a mini-windfall of $15 you can snowflake to one of your debts. Another way to create snowflakes is to round up when you balance your checkbook. If you spend $4.25 on a coffee, round the transaction up to $5.00. It may not seem like much but a few cents here and there can add up to a sizable snowflake by the end of the month.