Adventures in Debt Repayment...

A "debt snowball"  :)

We have been having so much fun paying off debt lately!  Seriously.  We are currently taking Dave Ramsey's Financial Peace University for the fourth time.  Yep, you read that right.  The fourth time.

Truly, we did learn a lot the first time we took the class.  For instance, we stopped using credit cards, stopped buying things we didn't have money for, we changed our life insurance to term policies, we wrapped our minds around the idea of selling things to help pay off debt, and we learned many other useful things.  The class really prepared us for our big move (that we didn't know we were about to make) from Michigan's Upper Peninsula to Arizona.  I don't think we would have been ready otherwise.

The second FPU class we took was good because we had just moved and it was good to revisit the ideas with our new "numbers"... you know, new salary, new housing & utility expenses, etc.  We missed about half the third class we took, because Matt's work had him traveling to another town pretty regularly.

Earlier this year, we got lazy about finances... this year we actually got into about $2400 debt after avoiding it for nearly three years!  :( 

So we decided it was high time that we got serious and took another class.  This time, we are really doing it!  We have kicked in to using our budget and the envelope system.  We also are selling stuff on ebay and Craig's List.  We've been putting the extra money toward making extra payments toward our debt.  So far, so good.  :)

This week, we unexpectedly received a check.  In April 2009, we bought a pop-up and learned a couple months later that in its past, it had been stolen.  Long story short, even though it wasn't the fault of the people we bought it from, they returned half the money earlier this year.  They've been working on gathering up the remainder and sent us the check this week!  Unbelievable.  And so wonderful!  I went online last night and plugged that towards the smallest credit card balance.

We also had an insurance adjuster look at our van, both for the parking lot "hit & run" a couple weeks ago, and for the hailstorm last week.  The checks they are sending us are in all reality worth more than what we could sell our van for.  We can fix the damage for quite a bit less than that, and apply the rest toward debt reduction.

So, this month we should be seeing our "debt snowball" start rolling!  I am just in awe of how God has provided this totally unexpected money that my husband was trusting we could find somewhere to pay off this debt.  We still have some credit card debt left, but I am excited to see that debt snowball kick in.  :)

Okay, you might be wondering, "So what exactly *is* a debt snowball?"  I'll try to explain.  First, you make a list of all your debts, smallest to largest.  You get crazy about paying off that first debt (garage sales, Craig's List, ebay, extra job, whatever).  Anything extra goes toward that first debt.

Then, when it's paid off, you take the amount of that minimum payment and plug it toward debt #2.  So, for example, our first one is $20.  We will add that to the next one, which is $38, so you can imagine that it will get paid off sooner, right?  Then, when that debt is paid off, you add both payment amounts to debt #3, and all your debt gets paid off *way* faster.  Of course, during the whole thing, you're still working it like crazy (ebay, Craig's List, etc.) to pay even more than those monthly payments.

So, that is what we're about to see start happening with us!  It's been so fun, working together in one mind toward this goal.  And it is such a God thing, really, to see how this is happening.  :)