Great Article
So my husband and I just finished reading a really neat article in my Family Circle magazine. Its called "8 Money Saving Tips from Finance Bloggers" and one of the sections, "Snowball Your Debt", talks about this guy, J.D. Roth who is at the website www.getrichslowly.org and how he got himself out of credit card debt.
What he did was picked one of his cards at a time, the one with the biggest debt and highest interest rate, and he paid off as much of it he could a month and only paid the minimum payments on his other cards. Once he paid off that card he took that difference in payments and started applying it to another card the same way. This way he didn't feel too overwhelmed and had a sense of accomplishment when each became paid off. And it makes it easier to pay off the remaining cards faster because that difference you were spending on multiple cards is now being applied to a smaller amount of cards, so it does like the title says and "snowballs".
I think this is a genius idea! One of the biggest things that effects people in debt is the sense of it never ending, hopelessness... And you often fall off track or feel like giving up because you never see an end to all the debt ever happening and with this, you literally can see the end of debt approaching as each card becomes completely paid off!
I think the sense of accomplishment doing it this way is a wonderful motivator in getting things paid off and it would almost act as a milestone marker too as to how much further one has to go to getting everything paid off.
We have always been really good at paying more than the minimum payments on our cards because sometimes the minimum only covers the interest or it doesn't even completely cover that. Thanks to that new law that makes the credit card companies show on their statements how long it would take to pay off you debt and what you actually pay in the end if you only pay the minimum, more people are realizing that they have to pay more than the minimum if they ever want their debt to go away and the $20 trip to McDonald's can end up costing them $100 (I am just throwing numbers out there to make a point with this example)... But it gets expensive in the long run and you often feel there is now end in sight.
So we have decided we are going to change our ways of always paying more than the minimum on all of cards and we are going to pick the card with the highest interest rate to start with and give this method a try.
One card has about $1,300 on it, which is the smallest balance on a card that we have, but it has the highest interest rate, 27%, due to one payment being about a week late (human error). We have tried to get them to lower it but they refuse so I want this one paid off first so I never have to deal with them again....
We will now take the difference of what we were paying over the minimum on the other cards and apply all of that towards this one card. I will let you know how it goes and hopefully this will work out the way I am hoping not only to get these things paid off but to keep me motivated and give me a sense of accomplishment as I see balances turn to zero.
What he did was picked one of his cards at a time, the one with the biggest debt and highest interest rate, and he paid off as much of it he could a month and only paid the minimum payments on his other cards. Once he paid off that card he took that difference in payments and started applying it to another card the same way. This way he didn't feel too overwhelmed and had a sense of accomplishment when each became paid off. And it makes it easier to pay off the remaining cards faster because that difference you were spending on multiple cards is now being applied to a smaller amount of cards, so it does like the title says and "snowballs".
I think this is a genius idea! One of the biggest things that effects people in debt is the sense of it never ending, hopelessness... And you often fall off track or feel like giving up because you never see an end to all the debt ever happening and with this, you literally can see the end of debt approaching as each card becomes completely paid off!
I think the sense of accomplishment doing it this way is a wonderful motivator in getting things paid off and it would almost act as a milestone marker too as to how much further one has to go to getting everything paid off.
We have always been really good at paying more than the minimum payments on our cards because sometimes the minimum only covers the interest or it doesn't even completely cover that. Thanks to that new law that makes the credit card companies show on their statements how long it would take to pay off you debt and what you actually pay in the end if you only pay the minimum, more people are realizing that they have to pay more than the minimum if they ever want their debt to go away and the $20 trip to McDonald's can end up costing them $100 (I am just throwing numbers out there to make a point with this example)... But it gets expensive in the long run and you often feel there is now end in sight.
So we have decided we are going to change our ways of always paying more than the minimum on all of cards and we are going to pick the card with the highest interest rate to start with and give this method a try.
One card has about $1,300 on it, which is the smallest balance on a card that we have, but it has the highest interest rate, 27%, due to one payment being about a week late (human error). We have tried to get them to lower it but they refuse so I want this one paid off first so I never have to deal with them again
We will now take the difference of what we were paying over the minimum on the other cards and apply all of that towards this one card. I will let you know how it goes and hopefully this will work out the way I am hoping not only to get these things paid off but to keep me motivated and give me a sense of accomplishment as I see balances turn to zero.
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