The Dash Debt method is pretty simple – all you need to do is list your credit cards in order of size and pay some extra each time you make a payment to the smallest one, gradually decreasing the balance until it is paid in full. You will pay the minimum payments on all the other cards.
When you’ve paid that bill off, start paying on the one that is now lowest, until all your credit card debts are dissolved. Showing a zero balance on one credit card motivates you to go onto the next.
Why pay down the smaller debts first, rather than one with the highest interest rate?
Logically, it would make the most sense to start with the credit card with the highest rate first. However, the psychological reaction to paying off the first card and then the second is invigorating. Also, paying off one debt allows you to pay what would have gone to both principal and interest to the next card up. Each time you pay off one card, you have more available to pay off the next. Thus, the payments average out in the long one, and the larger balances will be paid off quickly once more funds are free to pay them.
Ignore the declining balance of the lowest bill each month. Just keep on making payments in the amount you started with. More will go to the principal each month, and it will get paid faster.
Before you start paying down on your debt, it is important to resolve not to incur new credit card obligations. If you do, you will just replace old debt with new and never get out of debt.
One way to do this is take time to analyze any new purchase in light of “want versus need.” A need is something you must have to survive. Food would be considered a need, but pizza and pop are a want, unless that is the only food you can get your hands on. Shelter is likewise a need, but that doesn’t mean a larger apartment or house than you need or can afford. Resisting the impulse to buy or giving into the urge to spend a little more on ourselves or our loved ones is the key to managing this debt reduction program. Cut out every expense possible.
The second way to manage this program is to find a little extra work and apply whatever you make to your debt load. A few extra dollars a week goes a long way. Giving up a few hours a week may be all that it takes, plus you won’t have the extra time to shop.
Sticking with any kind of regimen can be really tough, but if there are rewards along the way, such as seeing a zero balance on your statement, then the route will be easier and easier to navigate. When you arrive at your debt-free destination, you will know it has all been worth it!