Break me

Now you need to put your plan into action. This involves something we call pyramiding. You may see others use the terms “snowball” or “avalanche.”

Essentially, it’s about focusing all your money on one debt and then building upon minimum payments as you knock out balances.

Go back to your list and review all the minimum payments due on your debts. Now compare those amounts with the numbers in your budget. (Don’t have one? Read how to develop an effortless budget.)

If you’re paying more than the minimums, reduce payments on all debts except whatever is No. 1 on your list.

For example, let’s say all your debt is on three credit cards. Each has a $25 minimum payment, but you’ve been paying $100 a month on each one.

To start your pyramid, drop the payment on each of two cards to $25 and add the remaining $75 to the third card’s payment. As a result, you’ll make $25 minimum payments on two cards and one $250 payment ($100+$75+$75) on the last card.

When that last card is paid off, take the $250 and add it to the second card on your list. Now, you’re making one $275 payment and one $25 payment.

When card No. 2 is paid off, combine the $275 with the $25 minimum you’ve been paying and make $300 payments until you finish off your debt.

The best way to make your pyramid grow

So why bother with the pyramid? If you’re going to be paying $300 in debt payments every month, does it really matter how you structure the payments?

The real benefit of pyramiding is psychological. It gives you a game plan to follow and helps you see results more quickly.

Rather than spending years paying small amounts without any apparent significant progress, you’re heaping all your money on a single debt and watching it disappear.

The secret to making this system work is to look for any and all extra cash you can redirect to your debt. Adding a couple hundred dollars to your payments each month will have you zooming through your debt repayment plan in no time.

And that brings us to our final point