The baby steps from Dave Ramsey's Total Money Makeover is a life changing tool! Last paycheck I dumped $850 into my Emergency Fund (EF). Granted, I feel super broke right now but payday is in 2 days! So I am currently on Baby Step 2, I am paying off the smaller balances to the bigger balance. Although some people might think to pay off the debt with the highest interest rate so that you save on fees/finance charges but I truly believe paying off the smaller balances is a better idea.
When you pay off a $300 credit card before you pay off a $18900 car loan you feel a little more empowered and ready to go intense on your other debts. Then, you take that credit card's minimum payment and apply it towards the minimum payment of the next debt PLUS any other money you can throw at it. This is the Debt Snowball, where the payments you are making are getting bigger and bigger the more you pay off. Its exhilarating!
Are you doing the debt snowball?
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