![\"snowball\"](\"https:\/\/i0.wp.com\/www.worlddrivecoaching.com\/moveforward\/wp-content\/uploads\/2012\/02\/snowball.jpg?resize=300%2C200\" "\\"snowball\\"")
If you have researched paying off debt in any form more than likely you have come across the “Debt Snowball” method of paying off debt.\u00a0 Many people have talked about it but most notably of those is Dave Ramsey.<\/p>\nIf you have researched paying off debt in any form more than likely you have come across the “Debt Snowball” method of paying off debt.\u00a0 Many people have talked about it but most notably of those is Dave Ramsey.<\/p>\n
Ramsey suggests in order to pay of debts quicker and get a psychological advantage in your process you start with your smallest debt and work up to the highest balance debt until you are debt free.\u00a0 I was thinking a few weeks ago, why not try this with my savings accounts?\u00a0 And so I have and thusfar has worked like a charm.<\/p>\n
I have several savings accounts which gets money automatically transferred into them on a set interval.\u00a0 These accounts are my budgeted items – you could call them my electronic envelopes.\u00a0 They are named for what they are to be used for such as car maintenance, clothing, birthdays, Christmas, etc.\u00a0 I know how much I want in each of these to consider them “fully funded”.<\/p>\n
I make a list of these accounts and how much each one needs in it in order to be maxed out at from the smallest one to the largest one.\u00a0 Now, the money that is budgeted for is put into these accounts with the most going into the smallest one each pay day.\u00a0 Once that one is fully funded I move to the next one on the list and put the budgeted amount into that account plus what was budgeted for the first account.\u00a0 We continue this until all of the accounts are fully funded and then everything that was budgeted for them starts going into my emergency fund.<\/p>\n
I find this to be a natural progression if you use the “Baby Steps<\/a>” as part of your personal finance plan.\u00a0 It easy to keep up with, you already understand the snowball, and it gives you another set of financial goals whose whole purpose is to keep you from getting back into the debt trap again.<\/p>\n