Paying Down Debt

The economy is NOT taking a turn for the better, I'm four years from retirement, and I have debt I want/need to pay down. So what's a girl to do.....come up with a plan of course...lol.  I put my debt reduction plan on hold for the summer because I had so many trips planned. And let's face it....life goes on...I can't pay down debt and NEVER live....BUT what I did do was make sure I had the cash up front to pay for my little excursions. I am so proud of the fact that I did not add to the debt over the summer! And I had a great time. Yes, yes, I know, I could have used the money to pay down debt but I made a choice....to LIVE and have ADVENTURES this summer and I don't regret the choice in the least!

How did I pay for four trips? I started taking out CASH for groceries and what ever amount I didn't end up using and I was frugral...I took that money and socked it away in an envelopes marked for each vacation. I did the same thing with my spending money for the week....which is just 20 dollars but no stops for teas and coffee...that added 20 to the savings each week. Next we keep out a weekly expenses amount of money...for gas, etc Whatever was left each week went into the savings also! It has helped a lot that my husband has been working some overtime too!

Now that summer is almost over...I will continue the same plan....finding little bits of money to stash away. I discovered that in the debt reduction world this is called snowflaking. Taking those little amounts and applying them toward debt. Applying it weekly is great because on credit card debt the sooner you do it.... it decreases the amount of time you are paying interest on the money. Second of all it takes it out of your "hands" so you aren't tempted to use it for something else. If not weekly then every two weeks is a good place to start.

In my personal plan I will divide money betwen three things: Christmas savings, debt reduction, and starting my vacation fund over again! Yes I could pay down debt quicker by putting it all toward debt but the other two items are part of life too and I need to save for them.  In addtion, this debt reduction is going to take some time but in the meantime I have to live life. The plan is to pay off one credit card first (highest interest and lowest balance) then use what I was paying on that to add to the second credit card bill. It will take time but I am excited to have a plan. Plus I have first hand experience that tells me a little here and there adds up to big bucks...I mean I did pay for four trips that way!!

Another debt reduction term (snowballing) means that whenever you get a big windfall (tax refund or bonus etc) you apply all of that toward debt. I seldom get a "snowball" that's why my main plan right now is snowflaking,.  When tax time comes around ...IF I get a refund I plan to pay at least some part of it toward debt reduction!

I'll keep you posted on my snowflaking and if it makes a difference. I read somewhere that for every dollar extra you pay on your credit card debt...you save 2 dollars...Oh yes and of course debt reduction means we are operating on a cash only basis. We have been for about six months....it's hard but doable.