It becomes larger as low. It is the same principle with your debts. You’ve achieved, until this moment, pay the minimum amount each month. But, ideally, you should find that little extra money that you can place to pay the debts each month. No matter how small, the important thing is to add to the minimum amount. Snowball initial you continue making minimum payments to all your debts. Then you add your extra money to pay off your debts to the smallest debt (in the example is loan staff.
You continue doing this until all debt is paid. Once you’ve paid your debt first, you add all the money you were paying on that debt to the next debt on the credit card example. If by example got $60 to pay extra to your debts (above the minimum payment); and you already paid your first loan, you want to say you have 100 + 60 = 160 $ to add to your next debt. When you finish the second debt, will have 100 + 60 + 180 = 340$ / month to pay the third debt and so on. Flakes of snow waiting, this does not end here. Let’s say that you get a bonus at work (I doubt it in 2009 but hey, you never know, you sold something on eBay, you has come an inheritance: any extra money you have and put in your worksheet, will add more value to your debt, and you minimize the time of payment and thus interests.) Manage your debts not living in fear towards the debts. You can take control, and if you can pay them more quickly. Anything with which you work, so are $15 or 1000$ extra, you can start your snowball right now so that you travel towards your financial security in a jet.