I had a friend email me and wanted to know what I am doing to be able to pay down my debt.. Well, the plan has been and is (things may be changing, thats another post)…in the last few months I’ve been using what is called “the snowball method”.. This is a Dave Ramsey move.. I have to be honest when I tell you I have never taken a Dave Ramsey course, I have never bought any of his books, DVD’s or CD’s but over time word gets around and you hear about it..
Before I get into that here are just a few things I’ve done on my own.
Three months ago, I stopped my newspaper delivery which was costing us a little over $11.00 a month. Not much but every little bit helps. I also cut my Pogo subscription which was $6.47 a month. I know another tiny but again, every little bit helps. I checked around for better auto insurance rates and I have the best so I called them up and I upped my deductibles from $500.00 to $1000.00 which gave about a $15.00 dollar discount.
Next, I switched my cable company. Time Warner was charging us almost $300.00 a month for what they call their “Whole Home” service. It’s pretty much their “VIP” treatment and while it’s nice it’s INSANELY expensive. Even when I dropped the whole “VIP” thing, it was still expensive, so I called our local cable company and signed up with them for two years and my bill dropped from $300.00 a month to $166.00 a month. Thats TV, Phone and Internet. While I realize that I can get rid of it all together, the Man wasn’t having it. He watches ALOT of TV and movies so on this one, I actually got him to swap companies
which he’s not happy about but getting rid of it all together? Not going to happen. And in a way I understand why. The Man is still recovering from his major spinal operation last November so he does spend alot of time laying down and the TV and video games are his main source of entertainment as we don’t go to the movies.
Then, we dropped Sprint who we have been with for our cell phones for thirteen years but for various reasons such as horrible cell service, lousy customer service and mostly because of the expense. We went with T-Mobile. Our Sprint bill was $184 a month for 2 phones. With T-Mobile we now pay $115.00 a month.
Getting back to the “Snowball Method”.. From what I understand, Dave Ramsey says to add up all your credit card debt and starting with the smallest balance owed begin chipping away at it.. It doesn’t matter which card has the highest interest, which has the highest balance, start with the smallest first because it’s easier and faster to pay off and when you have, it really gives you a great feeling , keeps you motivated and he’s right. So what you do is pay the minimum payments on all your other credit cards /accounts and the smallest one send in a double payment if you can. Before you know it that one is paid off and then you move onto the next smallest. You take the minimum payment for that one PLUS what you were paying on the one you just paid off and apply it now to THIS card. And you continue on like this until they’re all paid off.. Easy? No. Worth it? YES!
Emergency Fund: I am trying to create one of these in our savings account but since I am just getting started most of my money goes to paying down the credit and living expenses but, each month I have my bank withdraw automatically $25.00 from my checking and put it directly into my savings. I also keep a jar at home where every $1 dollar bill and all coin change goes into. I don’t touch that jar unless I am absolutely without other options and desperate. Same goes for the savings account. I don’t have much in the emergency fund yet but Im trying.
The Envelope System:
I can stress the importance also, of each month making a budget. Since we are on a fixed income, each month I sit down and add up all our fixed bills such as the mortgage, electric, cable, automatic withdrawals etc. I keep just enough money in our account to cover this. Next I add up things like, food shopping, gas, cleaning help, vet bills if needed etc. That money I take out of the bank and I label envelopes. Each envelope gets the allotted amount of money for each category. When it’s gone , it’s gone. You would be surprised how much more careful you are about your spending when it’s cash in your hand and you see it dwindling.
There will be times when “Murphy”(Murphy from Murphy’s law) will show up on your doorstep and throw everything completely and totally out of whack. When it does, do what ever it is you need too and then get right back at it. It can be really discouraging but eventually you’ll get back on track. Just don’t lose hope.
Lastly: I am cleaning out my house. The Man and I have SO MUCH STUFF and I can’t stand it!.. Recently I just sold some stuff on Ebay which sadly, you can’t make much there anymore because of all the fees etc but I made a small amount which I will apply to a credit card bill. I am also going to list things in the paper etc . We have way too much stuff and who needs it? We don’t see it for years, we don’t use it in years so why not make some money if you can?. If I can’t sell it I will be donating it, if I can’t donate it, it’s going in the garbage..
Wow! If you read this far I can’t thank you enough for sticking with me. Tomorrow I will write part two of what I am also doing to save money to pay towards debt.. I hope you’ll come back and check it out..
How about you? Have you made any changes? Any of my more experienced debt reduction readers see anything I could possibly be doing different? Care to share with me?