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| Christiandebtsolutions.org/debt-snowball |
I decided to go with the Dave Ramsey's Debt "Snowball" Method. I rearranged my payment plans so that I pay only the minimum on my two highest credit cards and all my extra money (part time jobs, unexpected money windfalls) are going to my largest credit balance. My highest should be paid off by December this year.
I've always heard about the "Snowball" method, but didn't like the fact I was only paying the minimum on my credit cards except the one with the highest balance. Psychology wise I could understand why the method works. It gives you the momentum to know you can do it, that you reached a goal, and can claim, "Yes I PAID off this card, now on to the NEXT".
Dave Ramsey's Debt Snowball Method: You start with your lowest balance and pay as much extra as you can over the minimum while on all your other balances you pay only the minimum. I made up the scenario below:
Credit Card Owe Min. Pay Paid off after
Discover $340 $20 $40 8 1/2 months ($340/$40)
MasterCard $545 $30 $30
American Express $620 $35 $35
Department Store $980 $50 $50
After 8 1/2 Months
Credit Card Owe Min. Pay Paid off after
Discover Paid
MasterCard $305 $30 $70 4 Months of paying $70
$30 + $40(What you paid on Discover Card)
American Express $340 $35 $35
Department Store $580 $50 $50
After 12 1/2 Months
Credit Card Owe Min. Pay Paid off after
Discover Paid
MasterCard Paid
American Express $200 $35 $105 2 Months of paying $105
Department Store $380 $50 $50
After a Year and 2 1/2 Months
Credit Card Owe Min. Pay Paid off after
Discover Paid
MasterCard Paid
American Express Paid
Department Store $280 $50 $155 Almost 2 Months
Debt FREE after a Year and 4 Months!!!
You can then put that $155 you have been paying each month toward credit cards into your savings or Emergency fund so your credit cards won't be used as much or contribute more for Retirement. You can finally contribute to a 403b, Roth 403b, or Roth IRA with ValuTeachers if it is offered in your area. Go to ValuTeachers.com to learn more.
I would love to read your comments about the Dave Ramsey "Snowball" method.
There are several tools now that can help. However, you will always have that group of people that say “I don’t have time”
ReplyDeleteI'm still trying the "Snow Ball Method". my car has been paid off a couple months now. That money ($260) is now split between paying off a Credit Card, my medical bills from a recent surgery, and a new AC. We bought the new AC last week after having it for 10yrs.
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