As a kid, I was fascinated by watching ants dig their tunnels and create their homes. They work together for the common good of the colony and they move one grain of sand at a time. The massive (to them) ant mounds that we see in our yards are the overall result of their slow and steady progress.
When clients approach me about helping them get out of debt, we talk about this "one grain at a time" method of debt removal. Really, when you think about it, slowly and consistently working away at an obstacle is the only way to successfully take care of it.
A few things to think about when we are talking about debt: most of us didn't wake up one morning and suddenly find ourselves $15,000 in debt; we got there by slowly, steadily, consistently, making decisions that put us in debt. Since the descent into the debt pit was slow and steady, the climb back out also has to be slow and steady.
Let's take a look at a real-world example of how this will work. We need a game plan. Husbands and wives also need to be on the same page, financially speaking. If they both aren't committed to eliminating debt from their lives, they are just going to create more strife in their life. The first thing we need to do is to create a list of debts, from the smallest amount owed to the largest, along with the minimum payments due. Don't worry about interest rates.
Here's an example. Let's say you have the following debts:
Now that we have all of our debts listed in order of least owed to most (again, ignore interest rates), it's time to set up our plan of attack. This is the time to get serious about getting out of debt. Pick up a part-time job, cut back severely on your living expenses, whatever is necessary to free up an extra five hundred dollars a month.
The "one grain at a time" method works like this: you take your extra $500 a month and apply it toward you smallest debt. Since you are paying $530 toward your department store credit card (the $30 payment plus your extra $500), that debt won't even last one month! Now take that $530 and work on the credit card debt. You'll be paying $730 toward the credit card debt (the freed-up $530 plus the $200 payment). In about ten months, you've paid off the credit card!
Now you're down to the car loan. At $880 a month, you'll drive that car loan away in less than ten months! Now you're close to moving mountains!
By the time you get to the student loan, you'll be paying $1,105 a month toward that debt! In about 18 months, you can kiss Navient goodbye! That debt is gone and you are living debt-free!
Thanks to your dedication, you've just eliminated $38,000 of debt in just 40 months, one grain at a time! Way to go!
The secret to the success of the one-grain-at-a-time method is to change your mindset. If you attack the largest debt first, which a lot of people are apt to do, it will be a very long time before you see if gone. You'll see the overall balance decrease a little each month but you'll still have all your other debts hanging around. Eventually, you'll get frustrated and stop paying extra and then you're right back where you were before - in serious debt.
But when you get rid of the small debt first, you see progress! That's one debt that's out of your life forever! Pretty soon, the next debt follows and then the next, and so on. By staying with it, you'll eventually become debt-free!
When clients approach me about helping them get out of debt, we talk about this "one grain at a time" method of debt removal. Really, when you think about it, slowly and consistently working away at an obstacle is the only way to successfully take care of it.
A few things to think about when we are talking about debt: most of us didn't wake up one morning and suddenly find ourselves $15,000 in debt; we got there by slowly, steadily, consistently, making decisions that put us in debt. Since the descent into the debt pit was slow and steady, the climb back out also has to be slow and steady.
Let's take a look at a real-world example of how this will work. We need a game plan. Husbands and wives also need to be on the same page, financially speaking. If they both aren't committed to eliminating debt from their lives, they are just going to create more strife in their life. The first thing we need to do is to create a list of debts, from the smallest amount owed to the largest, along with the minimum payments due. Don't worry about interest rates.
Here's an example. Let's say you have the following debts:
- $300 department store credit card ($30 payment)
- $7,500 credit card ($200 payment)
- $8,000 car loan ($150 payment)
- $22,000 student loan ($225 payment)
Now that we have all of our debts listed in order of least owed to most (again, ignore interest rates), it's time to set up our plan of attack. This is the time to get serious about getting out of debt. Pick up a part-time job, cut back severely on your living expenses, whatever is necessary to free up an extra five hundred dollars a month.
The "one grain at a time" method works like this: you take your extra $500 a month and apply it toward you smallest debt. Since you are paying $530 toward your department store credit card (the $30 payment plus your extra $500), that debt won't even last one month! Now take that $530 and work on the credit card debt. You'll be paying $730 toward the credit card debt (the freed-up $530 plus the $200 payment). In about ten months, you've paid off the credit card!
Now you're down to the car loan. At $880 a month, you'll drive that car loan away in less than ten months! Now you're close to moving mountains!
By the time you get to the student loan, you'll be paying $1,105 a month toward that debt! In about 18 months, you can kiss Navient goodbye! That debt is gone and you are living debt-free!
Thanks to your dedication, you've just eliminated $38,000 of debt in just 40 months, one grain at a time! Way to go!
The secret to the success of the one-grain-at-a-time method is to change your mindset. If you attack the largest debt first, which a lot of people are apt to do, it will be a very long time before you see if gone. You'll see the overall balance decrease a little each month but you'll still have all your other debts hanging around. Eventually, you'll get frustrated and stop paying extra and then you're right back where you were before - in serious debt.
But when you get rid of the small debt first, you see progress! That's one debt that's out of your life forever! Pretty soon, the next debt follows and then the next, and so on. By staying with it, you'll eventually become debt-free!
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