Let's Talk Debt | Debt Snowball Approach | Financial Freedom
Written by: Brenna
By now, it's no secret that I'm getting married in like two hundred-something days (but who's counting) and I'm doing everything I can to be as prepared as possible for the "Best Day Ever". Right now, my goal is to have the entire wedding ready to go by December 20th so that I can enjoy Christmas and not be swimming in a pool of stress tears every night. I've pretty much lived my entire life waiting until the last minute to get projects finished but that's all about to change. #fingerscrossed
A question I've been asking myself a lot lately is, "How can I enter this marriage financially?"... J.T. and I were very fortunate in college and didn't have to take out any student loans thanks to scholarships and our parents. We do however, both have discover cards and my balance has gotten a little out of hand. It's like I get swipe happy with that thing so I decided enough was enough! I can't bring my credit card mistakes into this marriage when J.T. doesn't have any. It's not fair to him! I took to the interwebs and stumbled upon Dave Ramsey's "Debt Snowball Approach" which is GENIUS.
What is a "debt snowball" you ask? I'll tell ya in the simplest form possible, an approach where you pay off the smallest debts first. Once you pay down that balance, you have more to put towards your larger and largest debts. I'm sure you're probably wondering how this is such a good idea so I'm going to lay it out all out for you in a nice numbered list below
1. Make a list of your debts and their balances. All of them: Auto loans, mortgages, student loans, credit cards, etc.
2. Place them in order from smallest to largest. I suggest using Google Sheets or Excel for this step so it's easier.
3. Pay the minimum payment on all your balances, except the smallest one.
4. Take every extra dollar you can find and put it towards the smallest debt. Once it's paid off, drink a margarita.
5. Now that you have extra money from paying off the smallest debt, go ahead and roll that up with the minimum payment on the next smallest debt. Repeat step 4 until the next card is paid off. Don't forget to celebrate with a margarita every time you pay off another balance.
Are you starting to grasp the snowball metaphor? If not, remember that you are taking the amount you used to pay off the first smallest debt and adding it to the minimum payment that you're already paying on the second smallest debt. Which makes a greater impact towards the balance and cuts down on the time you're spending paying down the balances. Everyone wins because interest is the devil and no one wants to pay more than they owe am I right?
There are plenty of other debt payoff methods and what works for some might not work for others. I chose this method because it works for me and my balances aren't so high that I'm drowning in interest. If you're interested in those other methods, let me know and I will more than happily guide you in the right direction with resources and calculators.
For those of you who don't know already, I LOVE spreadsheets. There's just something so beautiful about numbers organized nicely in a spreadsheet that makes me so happy. Lucky for you, I'm going to share the calculator I found online to map out how long it will take me to pay off my damn Discover balance. I used the google sheets version so that I could refer to it on my phone whenever I wanted. If you don't like google sheets, don't worry because I've got an excel version for you honey boo boo.
I had to change my #treatyoself attitude because I seriously don't want to burden J.T. with my Discover burden which seriously sucks because I love going to Target and TJ Maxx during my lunch breaks. I also hate "The Man" and don't want to pay interest to him any longer. So if you're serious about tackling your debt, you need to have a pep talk with yourself now about following through with the play. See what I did there?
Anyway, thanks for hanging in there with me on this adultish debt post. Your prize for sticking through to the end is the link below. Let me know if you need any help at all! That's kind of the point of this blog... Girls helping girls be adults and all that jazz.