Saturday, July 21, 2012

Another One Bites the Dust!

Good-Bye Debt!
I just received confirmation that another of the bills in our debt snowball has been PAID IN FULL!  Woo hoo!  This puts us one small step closer to the freedom of being without debt. 

In my post on my Financial Life, I talked about why we have this goal and where we were coming from.  I figured, in the wake of this good news, now might be the perfect time to share a little about the "how."

Most of our debt is from my student loan.  I am the poster-child for why you should never get a student loan.  No one enters college expecting to have physical problems that result in having to drop out after 4 years.  But, that is what happened to me.  This left me with a ton of debt and no degree to show for it.  Now, 10 years later, my whole family is paying for that decision.  On top of this student loan, we also have my husband's car loan, a couple of credit cards (we started with several more that we've already paid off), and some medical bills from a hospital stay a few years ago.

When I think about the total amount of debt, it is easy to become overwhelmed.  That is a big mountain to climb!  It is easy to become discouraged and feel like we will never succeed.  But, that is just why Dave Ramsey recommends starting with your smallest debt first (the debt snowball).  It not only gives you a feeling of success when you knock out that first debt, it also gives you a small, manageable goal that doesn't seem impossible to reach.

I understood that first part and would cheer with each of the small credit cards we paid off.  But, recently, I had started to feel overwhelmed when I looked at the whole picture.  It seemed like success was so far out of reach and that we would never get there.  Finally, I realized that each and every bill we paid was a success! Every time we crossed a creditor off our list, we had reached a goal.  I've had to stop focusing on the big picture and get down to the details.  Those details are what are going to get us to our final goal!

So, today we reached a goal.  The bill from my husband's first hospital stay has been paid off.  That also gives us more money to throw at the next bill on the list - a credit card.  This credit card is our new goal.  We are aiming for it to be paid off in two months.  A two month goal seems a lot easier to manage than a three year goal.

This idea of small goals, all leading to a bigger goal is also the driving force behind my weekly goals.  By focusing on the details (something I'm good at) I'm making progress - one step at a time.

I'll post more about my budgeting process next week.


Edited to Add:
For more information about our budgeting process, see the posts below.

Zero-Based Budget
Budget Planning with an Irregular Income
I'm a Nerd

2 comments:

  1. Thank you for this! My husband and I just recently created a debt-snowball plan that we are really excited to tackle. It does make it easier when it is viewed as smaller goals vs. the ENTIRE goal in years. Thanks!

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