4 Things To Remember When Paying Off Debt (#11)

#11 Four Things To Remember When Paying Off Debt.

Your life does not get better by chance, it gets better by change. Jim Rohn

True life is lived when tiny changes occur. Leo Tolstoy

1.  Pay off your debts from smallest to largest.This is a Dave Ramsey thing – the debt snowball. It is not my concept. My concept would involve spreadsheets, calculations of interest rate to balance ratio with consideration given to the size of the monthly payment. My concept would fail.

2. Personal finance is more about behavior than math. Also a Dave thing.  If we were math magicians, we would not have been in debt in the first place.

3. Paying off the smallest debt first gives you momentum. Once you have momentum it takes more force to stop it than to keep it going. That’s a physics thing.  Mathematically, it usually makes more sense to pay off the highest interest balances first. This is not about math, it’s about several small victories over a long period of time.

4.  It works. Not in theory. In practice. We slayed over $127,000.00 worth of Dragon from the smallest debt to the largest debt.

     What’s the first debt that you paid (or need to pay) off?

READ THIS: The Total Money Makeover by Dave Ramsey
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  • http://www.blogger.com/profile/04537026669359803300 Jen

    We’ve been in debt, out of debt, and are in debt again. So, I can’t really say what we paid off first or whatever. It all blends together now. Anyway, we are currently in a position to pay off our minivan in less than 6 months, then we’ll have only 28K in credit card debt left (plus, of course, the mortgage).

    We are in this position largely because I continue to read and be encouraged by yourself and the Queen. We certainly appreciate your journey. We feel the momentum, and it’s picking up speed. I predict we will be #debtfree (can I say that if it doesn’t include the mortgage?) before the end of 2013. THAT is a good place to be.

  • http://www.blogger.com/profile/08495342786740234364 King of Free

    keep going, Lady Jen. you got this. momentum needs way more force to stop it than to keep it going. and yes, #debtfree is appropriate.