No I'm not putting snowballs in envelopes. Because we have no snow :( However, I am toying with the idea of adopting these two strategies. I've known about them for a very long time and have always thought they were fantastic, but never actually implemented them. Probably would be a lot better off now if I had. Hindsight is 20/20 right? Anyways what am I talking about? First off the envelopes.
Frugal Dad wrote about this system in 2008. Yeah told you I knew about this for a long time. Basically the strategy being, when you get paid create a budget for say, food, gas, entertainment etc...and take out the necessary cash and put it in an envelope for each category. So instead of being out and about spending willy nilly, if you're wanting to go to the movies, you have to take out exactly what you need from the entertainment envelope. This will prevent you from going crazy at the concession stand and getting the jumbo popcorn, extra large soda and boxes of candies to boot. Your pants will even thank you for this one!
And now snowballs...
JD at Get Rich Slowly introduced me to the Debt Snowball maybe a couple years ago. I have to agree with him, it's the little victories that keep you going. So instead of organizing your debt from highest balance to pay off first to lowest, reverse it. Start with the smallest. It gives you a greater sense of accomplishment faster and helps keep your momentum going to tackle the next debt.
I'm now wondering why I never adopted these strategies back in the day. Probably because I felt I had to keep up a certain lifestyle and would be too embarrassed to say "sorry guys, the entertainment envelope is empty. No bars for me." Now, if I have to skip the bars to stay on budget and pay off my debts so be it. Debt free before 30 here we come!
Cheers
Marisa
I like the snowball idea! it's true though and it's so much easier to work out the smaller things than the big ones!
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