Pay off all debt except the house. That will be last. So, let's go back to STEP 1-- Did you save $1,000.00 as an emergency fund? Not done yet with $1,000.00? Continue with that step first BEFORE MOVING ON TO STEP 2. WHY? Here's the why!
WHY MUST I COMPLETE STEP 1 FIRST?
If you get into the process of budgeting and paying off debt, but leave no money for emergencies, those things in life that just happen, you may have a big problem and create a bigger problem for yourself. When it rains, AND IT WILL!! YOU MAY DECIDE TO USE A CREDIT CARD (REMEMBER IT'S USES ARE PRICELESS!) (NOT) ESPECIALLY NOW.
HERE'S THE TAKEOFF:
IF YOU HAD THE MONEY
THEN YOU WOULD NOT HAVE
TO USE A CREDIT CARD TO PAY MORE
FOR THE ITEM OR EMERGENCY!! (INTEREST)
Now, back to STEP 2:
Sit down and list your debts from smallest to largest. #1 is the smallest, #2 is a little larger and so on. For example:
1. Doctor bill balance $45.00
2. Dental bill $150.00
3. Loan from friend $200.00
4. Furniture balance $1,000.00
5. Car balance
6. School loan balance
Start from the top and work your way down! Why? Because when that $45.00 balance is gone you can X it off!! Success! You did it. Move on in the same way! You will begin to see that you are moving the needle and you can do it.!!! You will read that some people suggest paying off the interest bearing accounts first and specifically the highest interest rate, such as the car and school loan making the balance larger over time, but if that school loan is $200,000.00 then you will have no excitement in getting in a hurry and budgeting to pay it off quickly. YOU WILL NOT BECOME SO INTENSE ABOUT PAYING OFF DEBT! DAVE RAMSEY SAYS GAZELLE INTENSE! WHEN YOU CATCH THAT FEVER, YOU CANNOT BE STOPPED!! BELIEVE THAT.
Enough for Step 2. It is a tall order for some people. I get that. Just live where you are and focus on your steps. Baby Steps. That is why I say Financial Pacemaker Coaching will pace you along. Sometimes that is just what the doctor ordered! (PACEMAKER).
What are you waiting on? Get going. Call for help if you need.
