I've been reading financial books lately in hopes to be smarter with my money. I'm reading a book by Dave Ramsey called 'Total Money Makeover'. In the book, Ramsey talks about building wealth by first saving up an emergency fund and then paying down your debt.

Here's how it works...You start by paying down your smallest debt first and working upward. It's a method he's coined as 'The Debt Snowball Effect'.

If you're confused like I was, here's how it works...So, let's say you're paying $30 a month on your credit card. Once you pay off that credit card you add that $30 to your monthly $300 car payment. So, now you're paying $330 per month on your car. Once your car is paid off, you add that money toward your next debt. So, let's say you have student loan debt of $10,000 and you pay $200 per month. Now, you'll be able to add $330 to the $200 total you are already paying. This means you'll be able to pay $530 toward student loans and essential pay it off faster.

I was skeptical at first but I did the math for myself and I realized I can also be debt free within the next year. It sounds too good to be true but it's been working for me. The hardest part is paying off the first debt. Once you get the ball rolling, it starts going fast and becomes easier. If you're getting a tax refund this year, I'd suggest using it to help pay off your smallest debt.

My husband and I realized that if we follow this plan we'll be totally debt free within 10 months. That's actually mind blowing to us. Especially since we always thought it would be years down the road.

So far, it's been working wonders for us. If you're trying to pay down your debt this year as one of your resolutions, 'The Debt Snowball' is a great way to start.