Just a quick word on debt snowballing to finish out this series. I may provide some budgeting tips in the future from time-to-time as well!
The general idea behind the debt snowball is that after you have established your initial savings fund, you start attacking debt with every bit of money you have left over with each paycheck. You can do this, because you have made a budget that accounts for every single penny you bring home. You have designated budgets to cover food, gas, bills and all the essential extras. So, you shouldn’t need to leave a buffer in you bank account.
The way our budget is calculated right now, we literally have about $10 left in our checking account after each paycheck. We have cash to cover what we need for two weeks and shouldn’t even need to consider using our debit cards. This also includes any additional payments or movement of money required for us to live our lives.
To start the snowball, first choose which bill of debt you would like to tackle first. Perhaps this is the debt with the highest interest rate– so you can save the most money in the long-run. Or, perhaps you choose your smallest bill of total debt–for a small victory. Whichever you choose, put every extra penny toward that bill at every paycheck. Maybe it’s only an extra $25 to start. Maybe its $100. Whichever it is, you are making progress.
Eventually, you will pay off the debt item of your choosing. YAY!!! When this occurs, not only are you “saving” an additional monthly payment, you can now place that “payment” AND your extra money toward another debt item! Maybe initially you made the minimum payment every month to both bills of $50 each. And you were able to pay an extra $50 each month on the first debt bill you chose to pay off. Now, you can make payments totaling $150/month on the second bill. With each bill you pay off, your snowball will get bigger, you will be able to make larger payments and you will pay down debt faster. It is a beautiful thing!
As my aunt has always told me, “A penny saved is a penny earned”. Tackle your debt so that you can establish a savings that makes you and your family comfortable. Be diligent, so that you can take care of your family and live the life that you desire.
Being on a stringent budget may seem difficult, or even ludicrous. Saying no to pedicures, buying new clothes or going out for a coffee may not yet be in your wheelhouse. BUT, with time, you might find that you don’t need these items and you just might be happier living minimally and simply 🙂