Lately I've been using an app called Mint, it keeps track of your spending habits and balances. Not bad but could be better. Yesterday I decided to sit down and go through my finances because this year I am being hit with both school loans, state tax debt and other frivolous bullshit from 1 government agency who's name shall not be mentioned as Baba likes to say. I created 3 tables, the 1st table lists all my debts (Loans, CC, State Taxes...). 2nd table lists all of my recurring monthly bills (Rent, Internet, netflix, electric/gas...) and 3rd table lists all of my monthly expenses (Gas, Food, other)
In the 1st table I listed the balances, APR%, the minimum payment due and how much I pay in interests monthly. Since I have 5 major debts with various balances and APRs I was clueless as to which of these debts to focus paying off first? I had read online and been told in person that you're suppose to pay off your smallest balance first and work your way up to the bigger ones. Problem is I am more concerned about the interests being charged than paying off the smallest balance. This is known as the debt-snowball method, paying off your smallest debts 1st.
However I am more attracted to the idea of doing a debt-avalanche method where as stated on Debt Tips With the debt avalanche method, you pay off the highest interest rate first, and then keep going downhill (like an avalanche) with the next highest interest rate. This deAfinitely makes more sense and I have used several online debt calculators and I recommend using one called What's the Cost?. If you chose the interest option that's the avalanche method, if you chose the balance order that's the snowball method. According to this calculator I will be debt free in 8-9 years and will have paid about 8-9K in interest by using the avalanche method. This is somewhat depressing but not unbearable. I feel like I finally have a plan to get myself out of debt and yeah I'll be close to 50 when I am done but so what. Better late than never right! I am going to commit myself to the repayment plan and see it through. I should if I do the plan have paid off 2 CC within 10 months. This will give me a sense of victory! Next after I get home tonight from the adjunct dinner and lecture, I think I will make me some pie charts of the present and projected debt reduction! Then tape em to my wall so I have visual reminders to help me stay on track.
And speaking of staying on track, I have been pretty good about maintaining my daily commitment to eat at least 1/3rd-1/2 of my food be veggies or fruit. No way could I become a vegetarian because I love meat too much but I can be healthier.
Shabbat Shalom, the Sabbath is upon us, have a good evening everyone!
1 comment:
I applaud your decision to pay off the highest interest rate balances first. It's what I've seen recommended in the articles I've read. You've really explored all options and have a good plan to get out of debt. See you Tuesday night (late?). Love you, Baba
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