Help! Money Problems!

Credit card debt - yuck.

I have had a lot of it, and paid it off, and now have some debt again.  Working for a non-profit has not left a whole lotta money for paying off the balances, and though I am lucky enough to have low interest rates - they still accrue interest.

I was having dinner with friends recently, and they suggested I do a "debt snowball."  I like snow and haven't been able to make a snowball since I left Tulsa four years ago - so I asked my friend to explain. 

He told me about this money guy, Dave Ramsey, who has a plan to get out of debt.  The idea is to pay your very smallest debt first - disregardiing the interest rate - pay off the small debt.  Then, use that same payment money to add to your payment for the next smallest debt, etc.  Focusing your energy on one debt, and getting that debt out of the way, causes a "snowball" effect on your bills - they get paid off more quickly and overall, you end up paying less in interest.

I really had to think about this idea - for a long time.  It almost seems counter-intuitive, until you start doing it.  But when you watch that first bill go down to zero, you get encouraged.  And, if you buy his books or see the DVD's, you start to feel more powerful with money, and less manipulated by the credit card companies.

I am trying this debt snowball - and I'll let you know how it goes.  So far, listening to the CD's on debt, and saving have helped me change my habits.

There is a lot more to Dave's plan, getting an emergency fund established, setting a budget, paying everything with cash or debit card - but the snowball is a great place to begin.

If you are interested, check out his website or listen to him on radio or podcast.

Happy Monday,
Cynthia
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Cynthia McKenna, LPC, NCC
Counseling & LIfe Coaching
www.cynthiamckenna.com
CounselingBlog

Comments

[The DEBTective]

You're on your way, babe. Great job starting paying off your bills! Dave Ramsey's plan makes a lot of sense. Keep going and you'll deep-six your debt in no time flat. Here's looking at your, kid.

[Cynthia McKenna LPC, NCC]

Dear DEBTective -
thanks for your encouragement. I really appreciate it.

Cynthia
BTW - love the name "DEBTective"

[thebizofknowledge]

I had actually forgotten about the snow ball effect. I'm not sure if it's always been called that or not, but as as I was reading your post it came back to me. In my research on debt, it's encouraging to read these testimonies on what has worked or simply the sheer tenacity to get a handle on it all.