Paying down Debt
The Debt Snowball
The Debt Snowball
Another great Dave Ramsey idea, the debt snowball ( click here)
First. Don't pay anything off. Build a $1000 cash reserve. If you can save $100 a month add that to your envelope budget system. Once you have that $1000, you can work towards paying down your debt.
Make a list of all your debt. Order them smallest to biggest. Once you have your $1000, take they money you were putting towards that and pay off the smallest debt. If you were already making payments on that debt add that payment to your "snowball".
Example:
you pay $80 a month for credit card, balance, $800
you pay $120 a month for doctor bill, balance $1500
you pay $240 a month car pmt, balance $3,000
so you are paying $440 a month on debt.
you take the $100 you had budgeted for savings AND the $80 to pay the credit card. Once its payed off you take that $180 AND the $120 and pay off the doctor. Once that is payed off you take the $300 and the $240 and pay off your car.
Once your debt is clear you now have $540 a month you are use to paying in bills with. Keep budgeting that money but put it into your savings.
I read Total Money Makeover. I loved the book and his ideas, though it is very hard it do.
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