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Here is a description of your company. Proin ex id consectetur lobortis. Aliquam, velit vel faucibus dapibus, augue justo ullamcorper turpis, nec convallis metus nunc vel turpis.
Overview
I have not always been fiscally responsible. I know that seeing large numbers (three digits or more) in my bank account triggers me to spend, spend, spend. So I had to trick my brain into not seeing those numbers, by partitioning money for wants or needs, so that I have the capital on hand to spend when necessary.
Consumer Debt
A lot of my money over the past few years has gone to interest…which really sucks. First off, you already got what you paid for, in my case, it was eating out, a few sales courses, and one college class that was so far beyond my capabilities that I failed in the first few weeks, yet my pride did not allow me to withdraw-this ‘pride’ was over $2,000 at the time, and very likely just as expensive in interest trying to pay it off. Needless to say, my lines of credit were maxed out, and my credit score reflected my poor decisions (low 600’s…yikes). Luckily, I suppose, I didn’t need to pay my student loans. Well, not until 2020. That time was getting short. I did have a full-time job allowing me remote work, but my housing expenses were nearly 40% of my total income.
Windfalls
Each time I got a little extra money, I seemed determined to spend it in less time than it took to earn-this is clearly a problem if you’re already paying $200+ per month strictly in credit card interest. I needed to also adjust my method of paying off bills. I was taking the shotgun approach, paying some money here, some there, but without a focused attack, I was like a ship without a captain. So what I did instead was TURNED ON AUTO-PAY for only the minimum for all accounts except for my targeted account. Then, I followed the ‘snowball method’. This method states that you pay the most on your target account, and when you pay that off, all the money you had been spending goes to the next target account, in addition to the minimum you had been previously paying.
Choosing my target
There are two main theories in this regard, and you should choose the one you can better stick to:
Target the account with the lowest balance-if you hate slow progress, and need to see movement to stay motivated, this is the choice for you. It will take slightly longer, but you will get a dopamine hit from seeing the total number of accounts you have yet to pay off go down.
Target the account with the highest interest-This will pay off your debts fastest. Mathematically, your highest interest card will cost you the most in the long run.
I chose the second option, as I am a maximizer, and I always want to get the most for my money. For me, that was my credit card with $6,000 at 24% APR.
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