We’re cracking through a full month’s worth of tips to help you pay off debt effectively. Very simple, non-revolutionary tips coming straight from the Queen of Free that help answer the question we get so often –
“How have you done it?” From philosophical mind changes to nuts and bolts budgeting, you’ll find out what we know (which in all reality isn’t that much) in this series.
Day 11: Roll ‘Em Up, Roll ‘Em Up
Yesterday, we talked about getting a good handle on how much exactly you owe. Once you’ve gotten over potential sticker shock (even if you don’t owe nearly as much as we did, odds are you won’t be comfortable with that numbers), you need to get down to business.
Begin aggressively paying off the smallest debt first. It’s something that Dave Ramsey refers to as the debt snowball. It some ways, it’s very counterintuitive.
Because, wouldn’t it make more sense to pay off the debt with the highest interest rate first? Isn’t that what’s robbing you blind?
Yes and no.
Here’s the deal, once you pay off that first small debt (for us, a Kohls card), you automatically you roll whatever you were paying in payments into the next largest debt. You’re not missing anything out of your budget and you have more money to contribute to paying off the 2nd smallest debt. After you’ve paid off 2, 3, 4 debts, you have a very large snowball rolling toward the largest debt you owe (for us, Sallie Mae).
Just like a snowball rolling down a hill, you gain momentum.
Small victories are so important in your debt slaying quest. Because they prove to you that you can indeed win this battle. You can indeed pay off debt. You are a debt slayer. And just like the first one (and the second one and the third one) was paid off so will all of your debt be gone eventually.
What are you waiting for? Paying off that first debt will probably be fairly easy. Tomorrow, ideas on how to “find” more money in your budget to put toward paying off debt.