When my husband and I got married, he was debt free. I, on the other hand, gave him a very nice wedding gift to the tune of 35K in student loans. We were in love and everything was shared, but even still, we had to learn to manage our money in order to be happy—and we had to learn the hard way.
Very shortly after we were married, the babies came and I needed a car to transport them from A to B – bam 15K. Now our debt was 50K. How did this happen?! We wanted to buy a house but our finances were a mess and we were turned down – a lot. In order to fix this, we needed a plan. So we learned about snowballing.
This idea of snowballing comes from the brilliance of Dave Ramsey, a financial hero of sorts! He says to pay minimums on all your debts BUT pay off your smallest debt immediately. What has been working for us is tackling the small debt first and then building up to the larger debt.
Phew! One debt down! Then go to your second smallest debt and pay it off!! Two debts paid. Continue this trend each in ascending order. Allow yourself to be proud of your accomplishments! Do this until you can put all of your financial energy into paying off the mammoth ones!
Many people, including myself, felt like this was a backwards approach because I see my largest interest and think that I should work on that one. However, debt is slavery and it weighs on our ability to feel good about ourselves. Seeing progress is extremely rewarding and it engages your ‘can do’ attitude which will build the momentum you need to tackle the big debts. Set a goal for yourself like ‘I want to be debt free in X amount of time’ (think about that realistic time frame). Now, say it out loud! Tell yourself to do it. Don’t be afraid to set goals because ‘you won’t meet them’, set goals as directional beacons. Goals can’t be met, unless they are set! These small victories are what will ultimately make you financially sound for life. I found making the plan was exciting, because I was going to be financially secure!
Please don’t be fooled into thinking this is a quick fix – it is a kick start. Making the plan was not sexy or sleek. And I was not anticipating most of the difficulties ahead. For example, one of the hardest emotional blocks was writing down and facing what I had been avoiding up until this point. I had never written down all of our bills or actually saw the dollar amount we owed. I had successfully avoided doing this because denial felt safer for some reason.
I had dreaded acknowledging how deep in the debt hole we had sunk. I knew it would push me close to the edge. It was ugly and hard. It was not a quick fix nor was it a simple solution. The hardest part was yet to come.
Here’s what happened: I wrote down two columns of our bills and our debt and totaled our monthly payments. I calculated how long it would take at the rate we were going. It was terrifying and ugly. I did not like seeing it all before me; all the money we would have to spend burdened me with an intense sense of despair. How was this better then blissful ignorance?!
I felt like I was my teenage self, looking at my reflection in the mirror after taking off my makeup — there were all my blemishes, red, swollen and ugly. I painted on foundation every morning to hide what I thought was ugly. It was ugly, but like my finances, exposure helped promote healing because I could see where the problems were. What I never understood until I was able to look at the full picture was that I was stressed living “in blissful ignorance” because I was not able to make plans. I couldn’t anticipate anything; I only hoped the money would be there to cover all the bills. I had no goals, so I never accomplished anything.
It was stressful living broke without a budget just as it was stressful living with a budget striving for financial peace. I was only focusing on the immediate. Once I focused on the end goals, I saw something: I would live under some sort of stress either way, but one gave me nothing but the same thing for the rest of my life, the other choice gave me the chance to experience financial peace. Now that was something worth fighting for.
Photography: Flickr/ Beth
This post has been sponsored by InAltis Capital Management, LLC.