Lets make snowballs...
During my twenties, I accumulated loads of consumer debt. Credit was easy, everywhere I went I was offered a store card, a credit card, an overdraft. You are worth it, you need this and after all you are now “successful” - i.e. got a job and a salary - so you need to look the part. Store cards got heated buying the power wardrobe, credit cards used for holidays and accessories and I even got a bank loan to buy a white water kayak which I used for one wild holiday, scaring myself half to death as I plunged down roaring rivers and never used it again.
This was nothing compared to most of my friends and colleagues. With time, I was able to get my spending under control, but I still owned overwhelming debt. How could I get rid of it?
Getting rid of or seriously reducing debt is the Number 1 New Years Resolution after weight loss and is also right up there as one that many people will fail to achieve.
Why? After all there is loads of advice on how to get rid of it. The personal finance books all suggested the same approach: •
Order your debts from highest interest rate to lowest interest rate.
• Designate a certain amount of money to pay toward debts each month.
• •
Pay the minimum payment on all debts except the one with the highest interest rate.
Throw every other penny at the debt with the highest interest rate.
• When that debt is gone, do not alter the monthly amount used to pay debts, but
54
throw all you can at the debt with the next-highest interest rate.
This makes perfect sense. By doing this, you pay the least interest over the long term. The trouble is, the highest-interest rate debt is often the biggest debt and so focusing on this first is like tackling Everest when you’ve just learnt how to walk. You tackle it with determination and commitment but because it is such a giant it feels like you are getting now where, wearing you down until defeated you give up and go and buy something (on credit) to make yourself feel better.
This happened over and over. Start and fail. Start and fail.
Then I discovered the Debt Snowball method. This is similar to the traditional approach except that instead of attacking high-interest rate debts first, you attack the debt which can be paid off the fastest. This often means low- balance debts first. Why? Because you’ll get the psychological lift of blitzing debts off in rapid succession.
Logic says the first method is the best and if we were robots then yes it would be. BUT, we are humans and for us money and wealth is far more about emotions than just numbers and that is why we have to approach money matters in ways that make us feel successful emotionally.
Success breads enthusiasm and reinforces our motivation and that is why this makes all the difference. The Debt Snowball approach is: •
Order your debts from lowest balance to highest balance.
To advertise in thewire t. 07720 429 613 e.
the.wire@btinternet.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101