Video: The Debt Snowball: Erik and Lalani's Story

The Debt Snowball: Erik and Lalani's Story by thatjustinguy After the economic downturn, Erik and Lalani found themselves spending more than they earned. They knew they had to make a change in the way they handled their money. Now, three years later, Erik and Lalani have paid off most of their debts and have a sense of hope and peace about their finances.

Snowballing your debt may not the most logical choice, but many would argue that it is the best choice.  Logic would tell you to pay off the highest interest rate loans first. However, in practice many people find it is easier to pay off the smallest balance first.  The administrative burden of carrying the debt, watching it, and remembering to pay on time is eliminated more quickly by paying off the smallest balance first.  This also begins to free up your cash flow more quickly with the smaller balance loans.

Video: Mrs. Frugal's saving tips

Mrs Frugal's saving tips by TodayTonight For most of us, the cost of living is rising by about three percent a year, but one savvy Australian is bringing her costs down instead.

You don't have to be an Australian to appreciate the wisdom of frugality.  There are 5 Tips from Mrs. Frugal and they are:

• Change your attitude.  Slow down and enjoy life.  Why work yourself to death to make a little more money, when you aren't any happier?
• Reduce your debt.  Add a little more money to pay down your mortgage, credit cards, and other debts.
• Grow your own food.  The typical return on investment for an organic garden is twenty to one. So, spend a dollar on plant seeds and reep twenty dollars in rewards.  Plus, you can rest assured that the produce is free from harmful chemicals.
• Stockpile things that are affordable.  If boxes of spaghetti noodles go on sale, maybe you should buy as many as you can.  Load up when prices are low.
• Make due with what you have.  Look around your home and appreciate the things you have. Use them. You've paid for them. You should use them before buying something new.

Video: Dave Ramsey: How to Get Out of Debt

Dave Ramsey is a leading Christian financial expert. Not everyone agrees with him, including other "experts," but his principals have a biblical foundation. The bible teaches that debt is slavery and we must not allow ourselves to be indebted.  Baby step 1 is putting $1000 in an emergency fund.            Dave Ramsey: How to Get Out of Debt by NEWS9OklahomaCity Dave Ramsey shared financial advice and answered questions on NEWS 9.

Video: "Over $100,000 In Debt -- Couple Now Debt Free Without Claiming Bankruptcy"

Over $100,000 In Debt -- Couple Now Debt Free Without Claiming Bankruptcy by wisn Over $100,000 In Debt -- Couple Now Debt Free Without Claiming Bankruptcy

Here are some of the strategies that this family used to get out of debt that resulted from 16 years of overspending. The Hildebrands took drastic measures to meet their goal of being debt-free.

They started eating egg noodles, crackers, and soup. Switched to meatless dishes and quit eating out. They cut the budget to leave $5 at the end of the month. Quit buying brand name items.  Added water to stretch food. They saved $70 doing their own car repairs. Saved $250 by stretching leftovers and eating dehydrated foods. Saved $150 by buying things at thrift stores. Saved $200 by cutting their own hair. Cut out entertainment purchases altogether. Russell got a night job working as a janitor in addition to his job as a chemist. To save on gas money he slept in his car. It took four and a half years to become debt free.

Creating a Debt Snowball

One day it just happens.  You open up all your bank and credit card statements and realize things are out of control. Debt is piling up.  You've got multiple balances with different companies and different interest rates.

Sometimes, this can be out of your control.  It might be medical bills or an underwater mortgage.  In some cases, it could be out of control spending. Whatever the reasons for your large debts, a debt snowball is a simple way to get things paid off.

A debt snowball works by combining effort with increasingly powerful results that snowball into a force that cannot be stopped.  Like a snowball rolling down a hill, it gathers more and more momentum to reach the ultimate goal, which is being debt free.

The beginning step is to get a full understanding of the problem.  When you are sick and go to the doctor, the first thing that they do is check your basic biometric readings.  Body temperature, pulse, blood pressure, height, and weight are all factors that relate to your physical health.

Your financial health is also just as measurable.  Creating a cash flow statement that shows your cash inflows and outflows helps you to understand where you are spending your money.  A balance sheet will help you to build a list of all your assets and debts, as well.

What is your Total Debt Number?

Make a list of all your different debt accounts, using your handy pencil (with an eraser, just in case) and a piece of paper.  Go through your bank statement to make sure you are capturing all the places you are sending your money, so that you don't forget one or two debts that could slip your mind.  Once you have that list complete, order the list from smallest to largest.   This is the order in which you will be paying off your loans.

This is where the debt snowball approach differs from so many others.  Some people may tell you that it is most logical to list your debts by the highest interest cost first and pay these off before the others.  This is logical, but it ignores a basic fact about human psychology.  Humans need to feel and see their progress towards a given goal.  Without that, they will give up.

The debt snowball is an incremental process.  In the first month, you use a zero based budget to eliminate unnecessary spending. Then, you apply all remaining funds to pay off your smallest debt.  You do this over and over again, consistently, month after month, until the smallest debt is paid.  Once that is complete, you take the money that you would be sending to the old debt and apply it to the next largest debt.  You will notice that this monthly payment starts to get larger and larger.  Each time you pay down a loan, your available cash flow increases.  This is the beauty of a snowball approach, you build momentum with each passing month.