One note 7/28/13
1. I just wanted to publicly pat myself on the back, because today I paid off one of my credit cards.
I started using the Debt Snowball method (http://en.wikipedia.org/wiki/Debt-snowball_method) around the beginning of the year, because I felt like my debts were really starting to pile up. I had taken on some debt in the period around the end of massage school, before I started working, because I (perhaps somewhat naively) assumed that once I got a sweet massage gig, I would have the income to pay off the debts easily. Obviously, that did not turn out exactly how I expected, and I found myself having perform a careful balancing act every month to pay all the bills on my income.
So I looked at my debts, and the balances I owed, and picked the one that I owed the least on, which was an Ann Taylor store credit card. I think that at it's peak, I owed about $350 on that one. So starting in January, I paid double the minimum monthly payment, which was $25. So instead of that $25, I sent them $50. I did that for 6 months (and also did not use the card during that time) and now, in the 7th month, the balance was down to $40, which I just paid. So now I have no balance on that card, and one of my debts is paid off! I am proud of myself, because historically, I have not been the best at staying motivated and focused on a long-term project that spans months. But I stuck to it and paid that card off!
The next step is to move on to the next lowest balance, which is another store credit card, which I currently owe $195 on. During this phase, I will take the $50 I was paying on the first card, and add that to the minimum payment I have been making on the second card, which is $25. So if I am paying $75 a month, I should have that sucker paid off in three months. After that I have a third credit card, and then my car loan. And then, I guess my student loans, but that's a much bigger issue that I will tackle later. Right now just digging my way out of smaller debts again is my main task.
This debt snowball thing has really worked for me. I think it's because it provides a long term plan for paying off debt that breaks it down into manageable small chunks. At the beginning of the year, when I added up all my debts, it was pretty overwhelming. It felt like I would never be able to get out from under them. And I was feeling so strapped for cash that if someone had just suggested paying extra every month, I would have said there was no way. So I think it was helpful advice to just focus on paying off one at a time. Paying off the Big Number seemed impossible, but paying off one credit card with a balance of under $500, seemed doable. I felt like I didn't have any money to spare, but I committed to paying double the minimum, because I knew I could come up with an extra $25 a month. And now that I have a small victory under my belt, it's encouragement to continue.