Monday, May 3, 2010

The Debt Reduction Journey Begins

Today, I decided to kick start my ambitious debt reduction journey. I am using the Debt Snowball method that David Ramsey has made famous. Basically, he said to list your debts from the smallest amount to the largest, and start paying them off in that order. I idea is that tackling the little ones first gives you a psychological boost. The faster they are eradicated, the more you stick with the plan.

So that $7000 credit card debt @ 4.99% is going to get hit first. Actually I have 2 payments this month going in. Today, I paid $275 and next Monday will see another $1000 go in. Where did that extra dollars come from? My older daughter goes to a private school (we do get some financial aid here) and we pay on monthly installments. It is automatically deducted from a separate bank account that gets money directly from my paycheck. Well, the payment for this year are done, and we had $1100 left over. I decided to put that money towards the credit card debt.

Actually, since we don't pay over the summer as well, I hope to put another $800 towards the debt in August. That should leave the first debt in our snowball down to $4250 before September, if all goes as planned. By August of next year, the first debt in out Debt Snowball will be payed off as planned.

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