Why We May Need to Debt Snowball It

Debt snowballs make for quick wins. | Rose Colored Water

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AT LEAST FOR A WHILE.

Debt snowballs make for quick wins. | Rose Colored Water

I won’t lie. Since moving to Colorado, Mike and I have money bleeding from every orifice. I mean SPEWING. I mentioned how I felt that was okay for now, but you can only feel okay about falling thousands back into credit card debt for so long. I know I did this to myself. We have no one to blame. That being said, we haven’t given up on our journey to debt freedom. We just hit a small road block.

Lifestyle Inflation

This is one of the biggest reasons we have fallen back into a cycle of spending. We threw away a lot of things on this move (not enough though), and we made a pact to buy furniture pieces that better fit our style. Not to mention, we didn’t have a dining room table, a second mattress, or anything for an additional bathroom. Let me tell you – Target knows. They know you can’t resist their big, beautiful “on-sale” towels when you have a new guest bathroom to outfit. They know you can spend $100 without batting an eye.

But enough about that. The point is, we need want nicer pieces for our new home, and that all costs money. We also had to make some need-based purchases (food, toiletries, admin fees). It all adds up, and we don’t see it stopping anytime soon. We still need/want a dining room table, a media console, a larger tv, some nice area rugs, end tables, and a dresser. The list goes on and on. These are items we’ve been living without for some time now. And my apologies, Target, but we don’t want any more of your furniture…

These items can quickly add up to thousands of dollars if you make informed, thoughtful decisions. They’re not needs, but you can bet I want all of it. RIGHT. NOW. I can wait though. I’m a pro at waiting. I’ve spent my whole life waiting for some particular future moment that always seems to elude me. So we wait.

We Need a Quick Win (or Two).

On to the main point of this post – we need some quick wins. Or should I say, I need some quick wins. I’m feeling a bit discouraged about the whole debt pay-off journey. They said it would happen. I prepared myself for it, though I tried to fend it off for as long as possible. Our last win involved paying off the Chase card. It happened in February, which may seem like last month to you, but it feels like years to me. The number of life changes I went through between then and now is exponential. Therefore, I need some new wins.

Thankfully, military moves have some added benefits. If you have dependents, you are entitled to something called “Dislocation Allowance.” Right now, it’s about $2100. Plus, we’ll receive stipends for our days spent traveling, as well as for gas and some temporary lodging. You also receive money for moving your own things, so that will come into play. I don’t know how much we’ll be receiving or when it will be drop into our account, but I’m hoping it will be enough to pay off at least one large debt.

On the March pay-off report, you’ll see that one credit card has jumped significantly due to moving expenses, etc. I have two options for dealing with this.

  • Do I pay it back down to it’s original amount? OR 
  • Do I take the money we’re given and pay off debts with higher interest rates?

It seems silly to ask this question, but I am torn. Paying off the higher interest rate debts would offer the quick wins I’m looking for, as well as save money in the long run. Yet, I feel defeated every time I look at that particular card’s balance and how high it’s skyrocketed since moving here.

I guess it comes down to SIMPLE MATH. Pay off the high-interest debt, take the quick wins, and be rejuvenated to continue the fight against debt (and lifestyle inflation).

I need your opinion? What would you do?

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and From Cost to Coast*

16 thoughts on “Why We May Need to Debt Snowball It

  1. I would probably pay off the debts with the smallest balances first before paying anything else off. I didn’t even consider interest rates when I was doing my debt snowball. My fiance and I will be about 17k in debt after the wedding, thanks to my student loans, credit card debt (to pay for the wedding/furniture), and a personal loan for that same reason… Ugh. I am so ready for this debt to be gone!

    1. I understand! I hate this debt, but sometimes there seems to be no way around it! We’re at a point where only one of our debts has a higher interest rate (thanks to SCRA benefits), and I’m beginning to feel like we need to start debt snowballing to stay motivated. We would only save about $1000 if we went by interest rate. That doesn’t seem significant enough to take a gamble on with our debt journey. I’d rather stay excited and watch the debts fall off one by one.

    1. It’s true, there is higher interest, but most of our debts have similar interest rates that are in the 3-4% range. Only one debt has a ludicrously high rate, and it’s also one of our larger debts. Still, it’s hard to stay motivated when you don’t see any big wins for a while.

  2. As far as furniture- we’ve had some really good luck with the base yard sale page since people are always moving and getting rid of things and a lot of times will haggle on price because they want it GONE.

    As far as debt snowball- I’d start with the smallest amount first, regardless of interest rates As well. It’ll motivate you more to be completely DONE with paying something off. At least it did for us. Dave Ramsey knows what he’s talking about

    1. That’s good to know. I have heard a lot about base yard sales and Facebook groups that help each other out when moving. I’ll look into that!

      And yes, I do believe Dave knew what he was doing when he coined the snowball method. We need motivation, and since most of our debts are very similar interest rates, I don’t see why we shouldn’t use that to our advantage. Thanks for the input!

  3. One of the blogs I read this week (Debt Roundup) talked about putting some milestones in the Debt Avalanche so that you could pay off higher interest loans and still celebrate small wins. I thought that was a great strategy, since you get the mathematical benefits of the debt avalanche and the psychological benefits of the debt snowball.

    One way i can think is to execute this plan would be to chart all of your debt and think of it in intervals rather than different debts. (interval should match up with your plan, debt level and income). So say you have $80K in debt. For each $4K paid off, you give yourself a notable but not hugely expensive treat. (night out? massage?) Maybe at each $20K you give yourself a bigger treat. (Weekend away?) If these are things that you don’t ordinarily do at all but enjoy, they’re big rewards and motivators.

    1. This is a good idea. Thanks for stopping by. If I could get my husband on board with this, it just might work. I think that’s why I would like to start with my private student loans. They all have interest rates higher than my credit cards, and they’re all in the $1000-$3000 range. Quick pay-offs, higher rates, and easy wins. The truck payment is our only high-interest loan, and we’re planning on refinancing it soon – so to me, it seems that the writing is on the wall.

  4. This may be a stupid answer, but what would work best for you? Would you feel more victorious paying off small amounts entirely or seeing the amount with the highest interest shrink?

    Whatever motivates you to pick paying off debt over spending money would be the best choice. Besides, you can change your approach along the way. The most important thing is that you start!

    Good luck!

    1. It’s not a stupid answer. You’re right. I should do what works best for me, and if that requires flip-flopping around, than so be it. Progress is what matters. Thank you for your input!

  5. I’m a math person, so I’d pay down the higher interest debt and find a way to celebrate it and make it feel like the win that it is.

    1. I understand that. I just don’t know if we’ll have the motivation like we would if we paid down the smaller debts first. Thanks for the input.

  6. Isn’t it funny how February can seem light years away? Debt distorts our vision like that! I had a good month debt-wise in February (mostly due to a tax refund) and March hasn’t been as great so it feels like a different year, not month! I feel your pain on this decision you are having to make. I go back and forth myself. I have smaller debts I wanted to snowball that do not have interest (medical debt). But then I have this damn Capital One card and seeing the “finance charges” that are added every month KILL ME! I want to get rid of it so they stop adding to it!!! Good luck with your decision, you’re moving forward either way. -Erin (stay at home yogi).

    1. I always love your outlook on things. It feels down-to-earth and close to home. I think as long as we are making progress, flip flopping back and forth isn’t a bad thing. And many people try to put a very unemotional spin on debt pay-off, when it is indeed, very emotional. My husband and I are young. We have no children. We have been living with crappy home items for a long time now. We are finally doing a bit better financially and would like to splurge on ourselves. That makes the journey tough. Thanks so much for your input!

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