Our journey is going to be a long one, that is something we do know. So to ensure we are clearing debts in the right order we are going to snowball our payments to speed up our journey.
If you are unsure what this means, just think of a snowball. It starts small and then as it rolls it builds and builds, this is exactly like a debt. You start with the debt and then as you pay one off you put the money you were paying against another one, making the payment bigger, keep going like this until all your debts are paid off. When you clear your debts like this, not only do you feel as though things are clearing quicker, it also saves your money in the long run as you are cutting the interest you would be paying by clearing the debts sooner.
How you tackle these payments will depend on your personal circumstances.
My priority at the moment is to tackle our buy now pay later debts, we don’t have many and they are not particularly big. However, I don’t want to get into next year and find we have a little bit of money due before they add their interest. Then once they are paid, the money I was saving on this I will be throwing onto our credit card as this is the only debt outstanding that is not on a repayment option.
By that I mean there is no end date in the debt being cleared, it is just me paying off what we can each month. Whereas with the loan and car, regardless of whether we pay more a month or just the minimum, we know that by a set date that debt will be cleared anyway.
I’m not expecting anything to happen suddenly with our debts, however, the last month has been very rewarding as I have earned some extra money. As soon as this hit the bank I went through and cleared a debt completely, wiping it off our spreadsheet. It was extremely satisfying knowing that that was another chunk paid off, another thing cleared off the list. That moment gives you the motivation to push on a little more and clear another.
As we head into a busy time of the year, I know that things will get a little tough financially as temptation sets in but I am going to slowly roll that snowball towards 2021 with my snowball payments and push on with our journey.
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