Day 34- Snowflakes, Snowballs, Snowmen Part 2
Snowballs. A few days ago, I was reminded of the gag in the cartoons, where the single snowflake rolled down the hill, getting larger and larger until it would crush the antagonist. Often, this chain reaction would be caused by some sort of action the antagonist created in order to trap the protagonist.
Debt can be a lot like the snowball. Something small paid on a credit card could put you in debt, which spirals out of control. JD at Get Rich Slowly wrote about how he easily got $25,000 of debt in a matter of a few years and how it took him 20 years to get out of it.
I am hoping to get my debt under control in less than two decades, especially since I want to go to grad school and what not.
So, if accumulating debt is like a rolling snowball, why not think of snowballs 
as way to get rid of debt.
In Richmond, I liked throwing snowballs at snowdrifts on roofs. I would throw a couple of balls up there and watch an avalanche come falling down.
So any extra income I may have, I am going to treat as those snowballs and they will, in the end, bring down the debt. Yesterday, I wrote about snowflakes and how they can be created into snowballs the be thrown at debt. But how does that work exactly?
Snowballs seem counter-intuitive. Unlike common practice, which tells us to pay off our largest debts first, snowballs pay off the smallest debts first. And when that debt is finished, you use the exact same money to pay the next smallest, followed by the next smallest and so on and so forth. Finally, you only have your largest debt to pay with no other debt to distract you.
We're In Debt has a list of Snowball Calculators so that you figure out how to exactly pay off your debts.
It sounds easy enough. But being so counter-intuitive, how do I exactly decide which debts to pay off first? I hold so many different types of debt, it is not so easy as just lining them all up. Tomorrow, we will discuss the different schools of snowball camps.
Competence Moment of the Day- Grocery shopping for the month and saving over $17! Make fun of me if you want, but Sunday Morning Coupons are pretty freaking cool.
Sunday, February 3, 2008
Snowflakes, Snowballs, Snowmen Part 2
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2 comments:
Back in the day, I use to write myself a check for the coupon savings. So with $17.00 in coupon savings, you would would write a $17.00 check to your savings account. I was surprised I saved about $500 in six months. I am thinking I need to do this again.
Hi Alex,
I'm a friend of your mom's from FUUN and she sent me a link to your blog. Good for you and your financial choices. My husband and I are in our mid-thirties and have been together 10 years. We pay cash for everything. Our only debt is our home (purchased way below what we "qualified" for and a tiny loan on an older Highlander. Living like this and not spending money on over the top big ticket items gives us the freedom to do lots of things, such as pay cash for our international adoption - something many folks take out loans for. We recently paid cash for a used Civic for my husband's commute due to our commitment to save money. We have the peace of mind that whatever comes our way (car repairs, broken A/C etc.), we have the means to take care of. It also alleviates lots of marital stress that lots of folks have over money. So....you are on the right path! Keep it up and hopefully others will see your example. By the time you are in your mid-thirties you will be quite comfy with your finances while others are struggling to make minimum payments.
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