Friday, January 9, 2009

Getting rid of debt

As you can tell, I don't always like sticking to only beauty or hair related topics. I think that's why I frequent the Purse Forum and so much. Both forums are based on their main passions, purses and MAC makeup, but so many other topics are discussed as thoroughly as purses and MAC makeup too. I actually heard about Dave Ramsey from the Purse forum. Kind of ironic because many of the sought after purses are expensive.

If you want to find an effective way of reducing your debt, follow Dave Ramsey's Total Money Makeover. One of the key strategies to the Total Money Makeover is the "debt snowball." Debt snowball is basically listing all your debts from lowest to highest balance. Pay off your lowest debt as quickly as possible while paying the minimum on all your other debts. After your first debt is paid off, start putting those payments toward your second debt in addition to what you were already paying down on your second debt. Thus, beginning your debt snowball. Follow the same routine with all your debts. Some may argue that you should pay down your debt with the highest interest first. The satisfaction of seeing results faster by paying off lower balance debts quickly with the Total Money Makeover is why it is so successful. When people don't see results fast enough, they get discouraged. It's human nature.

Dave Ramsey states you can take control of your debt using these steps.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball

3 to 6 months of expenses in savings

Invest 15% of household income into Roth IRAs and pre-tax retirement

College funding for children

Pay off home early

Build wealth and give!
Invest in mutual funds and real estate
Did I follow all the steps exactly? Of course not. I think if I followed the Dave Ramsey plan strictly, which I didn't, I would have so much money saved up but, I have no regrets on where my money has gone this year. Well, maybe some. There are some unused hair and makeup products at home that would have been better used as payments toward my debt. Even though I don't follow the Total Money Makeover step by step, I do incorporate a lot of it into my lifestyle. Because of this, I have paid off my first debt during the Holidays. I was surprised that I paid off my first debt during a time when I usually spend the most. When I started the Total Money Makeover, I wanted to pay off my first debt before the end of the year. I ended up paying off my first debt completely on December 30, 2008. Very close to my deadline but still achieved my goal.

I just can't seem to do a routine or method exactly how people tell me to do it. (MODIFIED curly girl method anyone). I think I just can't be that strict because life itself isn't black and white. So many things come up. Other things I would rather do or spend my money on. What may work for someone, may not work for me so I need to change it up so that it WILL work for me. At the same time, I still can't do everything in excess. Any beneficial lifestyle change, no matter how small, is good. Even if you can't change everything all at once, positively tweaking how you live little by little will bring you success without feeling so overwhelmed that you want to give up.


Anonymous said...

very interesting

A. Rose said...

i totally agree with you that what works for others may not work for you. what's wrong with doing it your way as long as the end result is the same, right? i need to get dave ramsey's book ASAP before i get into any more debt!

ps. i'm now realizing how much money i could have saved if i hadn't been accumulating so many unnecessary beauty products...*sigh*

Girl with Curl said...

Anonymous: Thank you.

A.Rose: Yes, I don't even want to think about how much money I'd have if I never bought a lot of my unused and disliked products. You don't think about that though when you're shopping.

Janelle said...

Nice post. I've been thinking a lot about saving money for the future. I hope to curb my spending habits a little. It'll be hard though!

Girl with Curl said...

Janelle: Reading that book "Total Money Makeover" by Dave Ramsey helped curb my spending a little bit. I still get swept up in the beauty blogs and forums though and have to have the newest stuff.