I've been employed for 4 months now and after taking care of a few things with the house, I am excited to finally be getting started on our debt...in the form of a debt snowball.
Not gonna get too much into our business here, but in hopes to encourage others, here's our plan. Our debt is in the form of four credit cards. This month, I'll start with the card with the smallest minimum payment. We'll pay minimums to all four cards, but the card with the smallest minimum payment gets the extra which comes from my paycheck. We'll keep paying the same amount of extra to this card until it's paid off...which should take maybe until summer. Then we'll continue to pay minimums to three cards (instead of four), but the card with the next smallest minimum payment will then get all the extra (which includes the paid off card's minimum payment amount). After card #2 is paid off (maybe early 2011?), we'll roll all of that into paying the third card off. Eventually, we'll be paying all the old minimums and the extra to card #4. They call it a debt snowball because as you pay off each card, the amount of extra you have to pay on the next card gets bigger and bigger. Does that make sense?
The cool part of doing this snowball thing is that you don't have to have a lot of extra money to get the snowball started. $50 extra bucks each month starts the ball rolling. And many people can find that easily by just making a commitment to eat out less and use coupons more.
We opened up a 2nd checking account to keep my paycheck separate from the regular household account. This structure protects our debt snowball. This way if there are some months when we might feel weak and want to waste the extra, we'll remember that this is the debt reduction account and we really don't want to goof off with that.
Our motivation? Personally, I wanna be debt-free because I hate the weight of owing money to people. I want the freedom to do with my money what I want. One thing, in particular, that we want to do with our money when we are debt-free is take the kids to Disneyworld. Thinking about this trip is pretty exciting for all of us! I'm hoping for a Disney Land and Sea vacation. (Park for 3 days/Cruise for 4) It's not a "someday" thing for us anymore. It's gonna happen in a few years when WE'RE DEBT-FREE!!!!!!!
So...let's here it for being debt-free!
Hooray for my job that I love and allows me to help the family debt!
Hooray for the debt snowball!
(And hooray for the snow that fell from the sky today!)
Debbie
Comments (1)
Praying that soon you are debt free.
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