I hate being in debt! I feel that debt is a noose around my neck. For years I have been struggling to pay off a student loan. This has been a struggle and I will be so relieved to finally get this debt paid off.
Dave Ramsey refers to paying off debt as the snowball effect. He suggests that you tally up all of your bills and credit card statements. You have to be completely honest with yourself and your partner in doing this. You cannot keep credit card statements hidden from one another.
Now that you have that stack of statements in front of you, make a list of who you owe money to and how much you owe.
Next you are going to put this list in order from lowest to highest.
Create a budget with your essential bills and determine how much you have each month to pay off your credit cards.
At first this will seem overwhelming because you have so many bills. Let’s say that your lowest bill is $200 to a department store. After paying your minimum on all of your cards, use the excess to pay off this $200. The next month you will put that extra money on the $500 gas card you have. In two months this bill will be paid off and then you will put the excess money on the $1000 gold card you have.
By slowly paying off one card after another with the money you are saving, you will quickly discover that you will soon be out of debt. You are snowballing the money towards those higher cards, which is why Dave Ramsey refers to this as the snowball effect.
You mean I have to do this for two years? With determination and dedication, we do this for however long it takes. I’m want to get this done immediately and have to remind myself that I did not get into this mess overnight and will not get out of it overnight. With dedication and perseverance we will reach our goals.
What are you looking forward to paying off?
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