Anyone who knows me well, knows that I think about these 2 things every day, all day: Spending and Saving. No need to explain the 'spending' part, I'm sure. But in regards to 'saving', let's just say I have about 15 people who I seek financial advice from...as if I really have money in the first place! I watch Suze Orman religiously and take in all the 'Money 911' advice I can from The Today Show. I wouldn't say I have crazy amounts of debt but I do like my plastic!I have paid down some CC's using the old "Pay-the-highest-APR" strategy. It has worked but it now leaves me with the CC's with the largest amounts. I came across the Debt Snowball Effect while reading Simply Stated and I decided I'm going to switch it up a bit.
Debt Snowball Effect: Paying off your debt one CC at a time starting with the one with the smallest balance and working your way up to the largest one no matter what the APR is. It's psychological. You feel a sense of accomplishment when you finish paying off a balance and it makes you want to keep it up with the others.
Steps:
1. Make a list of all your debt and organize from smallest to largest amounts. Plan to pay the smallest balance first.
2. Pay the minimum on all other balances.
3. Once the smallest balance is paid off, allocate the money you were putting towards it and add it on to the next smallest balance.
Hence, snowball effect. This takes time and patience but I think it will make me feel better about what I owe. So, who's with me?
Been there. Done that. Great advice. It does work, but the hard part is to STOP SPENDING until the debt is paid off but it's doable, and the peace of mind once you do is so worth the effort.
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