24.1.13

Day #190: Budget Plan

This year I am taking the steps towards getting out of debt. Now before you read on, keep in mind...I said steps. In order to pay off my credit cards, I am robbing Peter to pay Paul...so to speak.

Anyways, I have thought long and hard about this but I am taking out my full student loan this semester. This will give me extra money to pay off a couple of credit cards and put money into the bank. I am going to follow a snowball plan to pay off the rest of the credit cards. My credit cards will be paid off by the end of the year. This will leave me with about $300 a month in income that will no longer be spent on credit card minimum payments.

Which I can then put towards student loans. My only solace in this, is that student loans are not considered "bad" debt. 

What are you doing to get out of debt?

For those interested, here is David Ramsey's snowball plan:

Debt Snowball by Dave Ramsey

First, accumulate $1,000 to keep as an emergency fund. This is easier said than done. Should I start selling random items from my house now?! Just kidding.

Second, list your debts in order starting with the smallest balance first. Ignore the interest rates, UNLESS you have two debts with the same-ish balance...then pay the higher interest rate debt first. Paying off the little debts first, gives you instant gratification and you are more likely to stick with the plan. 

So, with the snowball you are going to pay minimum payments on all your bills EXCEPT the smallest debt. According to Dave Ramsey, you are going to attack this bill with "gazelle intensity" until it's gone. Then add the minimum payment you were paying on this bill, to the second bill's payment. You do this each time, the purpose being you are adding more onto the next payment to pay off your debt (SNOWBALL...the snowball accumulates more and more snow as it rolls down the hill). 

Third, Do whatever you can to remind yourself that you DO NOT want this debt again. Post bills on the fridge. Write down how much you are saving by not paying that minimum payment a month. Whatever you need to do to keep you on track.
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8 comments:

  1. I really enjoy your blog! I know that you have said that you are not a Christian, but Dave Ramsey's financial plan is Biblically based. He is a Christian. God gives us valuable information in his Word that applies to our everyday lives. This financial plan is a perfect example of that. You are doing this plan so you must have confidence that it will work. I pray that you will trust God in other areas of your life as well. The Bible is full of wonderful information that God gives us to help us through this difficult life. I pray that you trust God to help you in all areas of your life.

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    1. Thank you “Anonymous” for your patronage. I have no doubt that Dave Ramsey might be a Christian since 85% of the American population is. I do however, doubt the validity of his financial strategy being inspired either directly or indirectly from the bible. In fact, if a person were to take the 10% tithe that is supposed to be given to the church and instead applied it to their debt; their debt would be significantly be reduced if not completely satisfied. My wife and I are not Christians, nor do we follow any other religion. We are secular humanists. We try to help people whenever we can. We have both chosen professions that allow us to do this. When we help people, we do it for it’s own sake and not for the hope of a celestial reward or fear of eternal damnation. Although, we do not respect your beliefs we do respect your right to have them. Just as we expect you to respect our right to have our own beliefs whether you agree with them or not. The content of this blog has been secular until this point and we would like to keep it that way. We appreciate your well wishes and wish you best of health and prosperity.

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  2. This is a great plan! I have heard Dave Ramsey's theory really works. I have seen it help many of my friends and couples. It's hard to be financially responsible but it brings so much freedom to your life to allow more enjoyable things. Wish you the best of luck and hope you succeed =) Btw thanks for the follow on my blog. I am new to the blog world =)

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  3. It makes me feel better that other people are taking steps to get out of debt as well! I have heard great things about the Dave Ramsey Plan as well. While I don't agree with all aspects of it (There is NO WAY I'm canceling my gym membership - it keeps me sane) I try to follow the overall principles (emergency fund, paying off one balance at a time with snowballs) and I have payed off multiple debts.

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  4. I think you're amazing, Chelsea. And you're blog is awesome, whether you're a Christian or not. I think this budget is a good idea, I might try it myself. And hey, if it doesn't work out, we could always try the door-to-door (or blog-to-blog) bible selling thing. :)

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  5. Ugh, we are doing the same thing. We have MAXED out our credit cards this year, between 5-6 months of horrible morning sickness which resulted in eating out every.damn.night, and weekly OB visits an hour away, followed by twice a day visits to the NICU for two weeks... yeah, let's just say I'm glad we HAD the credit cards.

    I have used his principles in the past to pay off our cards and it worked. We did the highest interest rate first though as it saved us the most money.

    Did you download the free Excel sheet? It's pretty neat!

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  6. Great goal! We love Dave Ramsey and now with his I Heart Radio channel, I don't have to tune in at a specific time. Dave on demand - the app is free so its cheaper than cable and keeps me on track! Good luck. Our family is so close to our last debt and can't wait till its done. Its taken time and patience, but it is SO worth it!

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  7. We have Dave's book. It is a little dusty from sitting on the shelf untouched for a while. We try to do a little every year. We are just not ready to give up our cable bill just yet. I am glad someone is working the program better than I am right now. :)

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