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Alicia’s Days 38, 39 & 40 – Reducing Debt, Paying Cash, & Smart Investing

I’m combining these three days of posts because I didn’t have a ton to share about each individually. 🙂

Reducing My Debt

When my husband was in the Marine Corps, they taught them debt reduction strategies, very similar to what Dave Ramsey has coined as the Debt Snowball. Basically, pay off the smallest debt, then take all that you were paying monthly on that first debt and pay that PLUS the payment on the second debt to pay towards the second debt each month. When that’s paid off, take all the money and apply towards the third each month. By the time you get to the last debt on your list, you’re making a good monthly payment, instead of just the minimum!

We do this to an extent right now. We pay off one, then take half of that payment to apply to the second debt, placing the other half in savings to build our buffer. It is a slower method than Dave Ramsey suggests, but it is working for us.

Pay Cash (or check or debit)

Paying cash and thinking before buying – it really is sound financial advice. Kevin and I are pretty much to this point. Our last two or three years of Christmas shopping have been cash only. Yes, it made for fewer presents for the kids under the tree, but they have too much already anyway. 🙂 The other part of this is stopping and thinking before buying anything – just take the time to ask ourselves: “Do I really need this?” “Will I still need this in a year?” “Will this be something that I will end up giving away or selling at the flea market down the road?” “Will this break in less than a year and I will have to throw it out?” Once we run through those questions and come up without any no’s, then we can buy the item – with the debit card or cash of course. 😉

Investing Wisely

We have an automatic savings feature at our bank. Any purchase we make with our debit card, they take the change and put it in our savings. So, if I put some gas in the tank of the van and it comes to $20.01, the bank transfers 99 cents from our checking to our saving account. It adds up faster than we thought when the bank first started doing it. The best part of it is that it is automatic. We currently don’t have any investments set up, but this is something we would like to consider for the future. I am thinking after we get our buffer started and pay down a debt or two, then this will be what we focus on.