Part Five – Let’s Build a Snowman

This is Part Five of my five-part, eight-week series on The Beginner’s Guide To Budgeting

To build a snowman you must first start with a snowball. You can then start rolling that snowball in the snow to create a much bigger snowball as more and more snow collects. Well, the same goes for money you put towards paying off your debt.

Most snowball theorists will tell you to focus on the smallest debts (easiest targets) first when looking at what debt to pay off. While that might be the fastest towards a feeling of self gratification and a sense of accomplishment I prefer rather focusing on the biggest bully in the bunch.

To me watching that huge number (however so slowly) dwindle every month actually motivates me to find MORE money in our budget to hit it with.

Even if you are one that prefers to take out the smallest debts first however you go about it you are getting ahead!

Our goal with this step is to trim our budget even further and find more income to put towards our debt!

Debt pay down plan:

  1. List out all your debts totals | Decide which one you want to target first.
  2. Find extra money | This is where you re-adjust your spreadsheets and maybe trim out some FLUFF and trim back on some FMEs to create more money that can be earmarked for that bill every month.
  3. Cut up those credit cards | You need to commit to not using them. If you can’t bring yourself to take a scissors to them just yet try freezing them in a baggie of water. And clear out your cookies on your computer!! No auto-filling  your credit card numbers into online shopping carts.
  4. Put any and all extra money towards your debt | Commit to putting that birthday cash, that 2% raise this year or giving up your mani/pedis for awhile and lopping off your debt. I can guarantee it will feel so much better to not be bound to your debtors than a shiny new coat of nail polish on your little piggies.
  5. Snowball your money into the next debt | When you have paid off a debt (regardless of how large or small) put that extra cash now towards the next one on the list and continue to do that as your debts are paid off and the amount going towards the next one gets bigger and bigger.

This whole process will obviously be a work in progress and will need to be re-evaluted time and again as your income changes, debts change (hopefully go down) and life happens.

By having a great budget in place and committing to tackling your debt you will not only reduce your money worries but you will be the boss of your bank account.

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