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Think about it. If you are currently carrying a $10,000
credit card balance at an annual interest rate of 24% you are literally
flushing $2400 a year away for NOTHING. That’s $200 a month! It’s just money
that the credit card is taking from you. If you are able to pay that card off,
those dollars can be reallocated and spent where and when you want. Most Americans today think that $10,000 of
credit card debt and two car payments in the household are ‘normal’. This ‘normal’ is making the credit card
companies rich. Last year it added up to them earning $18.5 BILLION dollars in
interest charges. American’s habits of charging things like gas, groceries, clothing,
mani’s/pedi’s, tools, car repairs, etc added up to a whopping Trillion Dollars
last year. It’s time for a shift in mindset, behavior AND habits.
I teach my clients to use the debt snowball technique once
we establish their monthly budget.
How does the debt snowball work? Its simple. You list your debts (other than your mortgage) smallest to
largest by amount owed. Don’t worry
about the interest rates, just list them! ANY and all extra money goes to the
smallest debt on the list each month until it’s paid off. Why do I not suggest
you pay off the highest interest card first? I agree that mathematically it’s
correct that you would pay off the highest interest card/loan first BUT this is not about
math. It's about behavior. If it were simply a mathematical issue you would have already done the simple math and realized that there wasn't enough coming in to pay off what was charged or bought. Using the snowball and paying off the smallest debt first gives you instant
success and you can see and feel the results of ridding yourself of a debt.
Once you do that with one, you will want to continue until it’s ALL gone! There are plenty of tools that can to show
the efforts of this technique. For more information on how a financial wellness
coach can help you gain back control of your finances visit my website at www.sickofthehustle.com
