Let it snow, let it snow, let it SNOW!

Growing up in Seattle, WA, you would think I would be used to this white stuff people up north call snow...I am not. 2 years in CA, 11 years in GA,  and 4 years of college in SC made me a wimp when it comes to cold weather!

We just had our first snow of the year last week- BEFORE THANKSGIVING!! Oh boy, I am not sure I am ready for this! Don't get me wrong, it is beautiful! It just piles up, stays too long, and causes all sorts of driving troubles! But, welcome Mr. Snow, please enjoy your stay this winter!

As I thought about snow- snowmen, snowball fights, shoveling snow- I began thinking about our own DEBT snowball. No, I did not cleverly coin this term, but it fits well into this time of year! The debt snowball is actually used by many financial gurus and you know what's crazy?? It actually works!!

One way to make a great snowball is to make a small snowball and just start rolling it. As you roll it, it gathers more and more snow becoming bigger and bigger. And, if you were to roll that small snowball down a big hill of snow, it would collect snow and gain speed as it continued collecting snow! The debt snowball works the same way!

List your debts by amount of debt smallest to largest (don't worry about the interest rate right now). Start off by working to pay off the smallest debt first. Once that first debt is gone, you now have a little bit more to put towards principal and will then pay off the second debt a little bit faster. Then, that debt will be gone, you will have more to put towards principal and so forth.

Doesn't make sense? Okay, let's break it down. You have a $6000 car loan, a $500 credit card bill, and $10,000 in student debt. Your minimum payment for the car is $300 a month, the credit card $25 a month, and the student debt $175 a month. Your initial reaction might be to pay off the student loans with a higher interest rate first, but look at how big that loan is? You would spend months on it and get nowhere fast, then get discouraged and eventually, give up.

 However, let's see what happens when we start with the smallest one first- the credit card. You pay your minimum payments totaling $500. You find at the end of the month you have $500 left over- pay it on the credit card. Now, the credit card bill is gone and you have an extra $25 a month that was going to the minimum payment on the credit card. Next, the car loan. Pay your monthly payment of $475 (student debt and car loan) and put an extra payment of $525 towards the car. You should get the car paid off in about 7 1/2 months instead of the next 1 1/2 years!! In less than a year, you now only have your student debt and an extra $325 plus the $500 you started with to pay on the principal. So, you pay the minimum payment of $175 and put $825 toward the principal! With that extra $825 now built into your debt snowball, you are traveling fast toward being debt free! Once you are paying on the principal of the student debt, the minimum payment goes away (as long as the $10,000 is one loan) and you now have $1000 to put towards principal each month! You see where I am headed??? In 10 months, that student debt can be gone!! In 1 and 1/2 years, you could be debt free and the owner of your car instead of the years and years that it would have taken you if you had just made minimum payments!!

This scenario can change slightly based on interest rates and the way your loans are split, but the method always works! It SUBTRACTS years off your debt repayment and ADDS years to what you can save for your future! Remember, this is simple math!

When Dave and I were married, we had a total of $60,000.00 worth of debt- one car loan and 10 students loans. We began working on our debt snowball the first month we were married and now, 14 months later, we only have 3 student loans left to go!!

As much as I complain about the snow, it is beautiful. The world turns into a winter wonderland and for a brief moment in time, life slows down just a little bit. Children laugh and play, adults enjoy time with their kids, and all the flaws of the earth are covered by this beautiful white blanket called snow. Snow is an amazing reminder of the greatest debt repayment ever made- the death of Christ on the cross to pay for my sins so that I could be washed white as snow. So, let it snow, let it snow, let it SNOW!

How the Grinch Stole Christmas

This time of year always reminds me of the first time I watched the real "How the Grinch Stole Christmas" with Jim Carrey.

It was November 29th, 2001, and I was home with my 5 younger siblings. My parents had gone out for their anniversary dinner and left me in charge of the younger 5- ages 11 to 1 years old. They left us pizza and a movie- what could go wrong!
They left for a relaxing dinner away from 6 children while we ate yummy pizza! As I cleared up dinner and sent the kids into the living room to get the movie set-up, I decided to make some popcorn. The popcorn was done, "Ding!" And we all settled in to watch "How the Grinch Stole Christmas."

About halfway into the movie as the 1 year old was running around the house in her diaper, the fire alarm went off. I panicked. I grabbed the 1 year old, a handful of diapers, the house phone, and told all the kids to "RUN!! GET OUTSIDE!!" We raced out the front door, the 3 year old now in tears and the 1 year old still in just a diaper...remember what month it is??? I called 911.
I told them "The house is on fire! Come quick!" Then, I called my parents. "Did you see any fire?" "No." "Did you smell any smoke?" "No." "Why did you call the fire department?" "Because the fire alarm went off!!" After a moment of silence and a long sigh, my dad sweetly said to my mom, "Get the food to go. The kids are standing out in the cold and the fire truck is on its way."

The fire truck arrives...with all the bells and whistles. At this point, our neighbor is at the house and the younger ones are staying warm in the back of his car. The firemen search the house high and low- no fire. They take down my information- "Yes, these are all my siblings. No, we weren't being stupid. We were just watching a movie!" And then tell me, "Have a goodnight!" And with that, I burst into tears!! How stressful for a 13 year old!!

My parents finally arrived home. Tears were wiped. Hugs were given. Thanks was given to the neighbor. And my parents finished their anniversary night snuggled on the couch with their 6 kids, eating cold pizza, and watching the rest of "How the Grinch Stole Christmas."

Yes, this story will always make me laugh. However, there is a Grinch that wants to steal Christmas from you and his real name is... the credit card!! And that story isn't so funny!

How often does the count down till Christmas make you cringe?? 6 months out- you've got a plan to save. 3 months out- that plan isn't doing so hot and you are starting to panic. 2 weeks out- put it on the credit card. We will figure out how to pay for it later. Sound familiar??

The holidays are stressful enough with parties, family, Aunt Susie, and all the gifts you have to buy. The last stressor you want to add is a credit card bill as long as Santa's naughty list (and I hear that keeps getting longer!)

 

The best way to avoid the evil Grinch of Christmas is to start saving on December 26th! Begin putting away money every month that is just for Christmas presents. That way, when December rolls around, you can freely give gifts without acting like the ol' Grinch himself!

Dave and I have a coin jar that we fill up over the year. This is our "Christmas" jar. Every penny that goes into this jar will be cashed in for Christmas at the end of the year. This year, our jar brought in $200 worth of Christmas gifts! Not too bad for a year of loose change!

Don't let the Grinch of the credit card companies steal your joy this Christmas season. The true meaning of Christmas isn't in the presents but in the act of giving in love. Don't be carried away by the commercials and newest gadgets. Time on the couch, eating cold pizza with your loved ones may be the best present they get this year!!

Oh, and the fire alarm?? It was set off by a spider and its cobweb waving in front of the sensor. Go figure!!