When I first started paying off my debts, I did as Dave Ramsey suggested and figured I would attack them with the debt snowball. I listed my debts smallest to largest then proceeded to pay off the smallest debt with any extra money I could get ahold of. Meanwhile, I was making the payments on all of my other debts too. At first I thought this method would take FOREVER. I mean, it took months of adding an extra $100 to my smallest $500 balance credit card--five months just to be able to pay off one credit card--which seemed at the time to be the slow and depressing way to pay off debt.
Fast forward to today when we only have a couple of hubby's credit cards to pay off before becoming completely debt free except for the house. Since all of the smaller debts have been paid off using the debt snowball, ALL extra money can be put towards one of his two remaining credit credit cards while we continue to make the minimum payment on the last card. Because we don't have a dozen debts to pay on each month like we had in the beginning we can literally make monthly payments of $1,500 to $2,000, and sometimes even more, on the second to last card while still paying the minimum on the last credit card. I walked into the bank a week ago to make a payment on the second to last card, handing the teller a check for $2000. She asked if it was a deposit into our checking account and I said no, it was for the credit card. She did a double take at the amount but didn't say anything else. Guess they know now we are serious about getting out of debt!
So the message to everyone just starting out with the debt snowball is that yes, when you first start with this process, it will seem slow, but as you knock out each debt and add the money you would have used to pay on the last credit card to the next one on your list, you will be able to make larger and larger payments. Pretty soon, instead of adding an extra $50 or $100 to your debt payment, you will be about to add an extra $500 to $1000 or more and get yourself out of debt forever (just remember to cancel each card as you pay it off)!
Good for the two of you! I can imagine the beginning process pf debt repayment is much like a diet...people want to see progress like yesterday. But, once you start to see the progress, you get more motivated.
ReplyDeleteBefore I got serious about being completely debt free, except the house, I would pay off any CC debt with whatever money I got as an income tax refund, so I have never done the Debt Snowball. But, I know a lot of Dave Ramsey disciples so I know the system must work.