Snowball Your Money with Affirmations with She Makes Cents

{Money Hack} Quick Guide to the Debt Snowball

Published on January 20, 2016January 22, 2016 by Danielle YB Vason14 Comments

If you are a frequent reader of shemakescents, then you will constantly hear me referring to a snowball, but what exactly does a snow ball have to do with personal finance? The snowball is a metaphor that represents my current financial goals. Picture this… someone picks up a small handful of snow and creates a ball. That ball is then pushed down a hill and with every rotation picks up more snow and speed. By the time it reaches the bottom of the hill, the ball has multiplied in size. Photo Credit: PM Images

Now let’s break it down…

Simply picking up the ice to form a ball represents motivation. Most people would have seen the snow but left it alone because it’s too cold to bother with.
The small ball, created from motivation, is a manifestation of the strength of my current financial situation. It’s small right now, but will grow with better money habits ahead.
The snow ball being pushed represents my obligation to myself not to settle or stay stagnant. You have to keep moving to make progress. With every rotation (aka payment above the minimum) the fight against debt gains momentum until it gets to the bottom of the hill aka “The Land of Financial Freedom”.

Financially speaking, it looks like this:

Current Credit Card Minimum Payment = $89.00
The Average Monthly Payment I Make = $450.00 ($300.00 per month + the average of the 2016 version 52 Week BINGO Money Challenge) will have me credit card free in 9 months at the longest.

Once the credit card has a zero balance, that money will be “snowballed” onto my monthly student loans. Instead of paying the $200.00 minimum for those, I will then pay $200.00 + $450.00 to equal $650.00 per month on student loan debt. Doing this will shave 12 years and 7 months off my expected repayment term and save me about $6,555.55 on interest alone.

Once the student loans are eliminated, I will then have an extra $650.00 every month. That’s an extra $7,800 per year that could be applied to savings, investments, or a down payment for a large purchase.

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Finance Blogger, Danielle YB Vason of She Makes Cents, reveals her motivation to pay off debt.

{Debt Management} How to Shorten the Length of Your Loans & Reduce Interest

Published on September 10, 2013April 3, 2014 by Danielle YB Vason10 Comments

Wanting to get control of your finances is great, but there is nothing like the empowering feeling of knowing when this MAJOR life goal could actually be attainable. After examining my debts, pay off amounts, and interest rates, I am proud to announce that my magic number is 8 years and 3 months to be debt free! Having an end date for a goal helps to make it more tangible and keeps me encouraged to hit my payment milestones from my personalized Financial Plan.

One Year from Now- Operation Credit Card

In January of this year, I revealed that I racked up $5300.00 in credit card debt, after getting it down to a zero balance. It happened by not adapting my spending habits to my drop in income. Today, that balance is now around $3400.00 by paying a little more every month on the minimum and doing the 52 Week Money Challenge (Bingo Style). Dare I say it out loud, I will have NO credit card debt by this time next year (insert fireworks here)! I’m truly proud of the way I have tackled this particular debt obstacle because I’m doing it at my own speed. I don’t even miss the extra money that I’m using to knock the balance down faster. If I were okay with just paying the minimum, it would take me 4 years and 3 months, instead of one year, to complete step one of my financial plan. Once the credit card is paid off, my monthly credit card payments will become extra payments to my student loans and so on…this is called the Snowball Method.

Four and a Half Years from Now- Goodbye Sallie Mae

I have a love/hate relationship with Sallie Mae. Although we go back about ten years, she is not my friend nor is she yours. Don’t let her fool you. Yes, in times of financial need, she was there but in reality most people end up paying more than double for their educational loans. Currently, I pay the minimum $200 per month for my educational loans with more money being applied toward interest and not the principal. As I’m sure you know, paying just the minimum and nothing more will result in years and years of interest and a longer pay off timeline. In fact, by adding the money I would normally use for Operation Credit Card to make two or three lump sum payments per year toward the principle, not interest, I will shorten the length of my loan by 10 years and 11 months. Five years ago, I was a recent college graduate and while a lot has happened in that time, I still feel like time flew by. Knowing that these next five years could go by just as quickly helps keep me motivated. One day, four and a half years from today, I will be able to say goodbye to my financial frienemy- Sallie Mae for good.

Eight Years and Three Months- Debt Free

A lot can happen in eight plus years that could slow down my timeline or cause me to come up with a new goal altogether. Regardless of what life throws my way, I hope a victorious sprint toward financial freedom is in my foreseeable future. In eight years, my home will be a rental property providing is a great form of passive income. Having it completely paid off allows a greater financial contribution to my household. The idea of never having to think about another mortgage payment for my current house is a blessing in itself and I plan on tackling this debt by using the Snowball Method. In the same breath that I say goodbye to Sallie Mae, I will be begin this last phase by saying hello to extra payments, consisting of my monthly credit card payments and Sallie Mae payments, on top of my current mortgage.

What’s the point of all of this? Sure, I could continue to pay the minimum on my bills every month and I will forever owe someone but I have 17,636 reasons why that won’t work for me. Yep, having a plan and attacking my plan will help me save an overall of $17,635.15 in interest payments. While yes, I am at the beginning of my journey, I take solace in knowing there is light at the end of the tunnel.

How Long Will It Take You to Be Debt Free?

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{Financial Cents} 4 Smart Ways to Spend Your Tax Refund

Published on February 20, 2013February 4, 2016 by Danielle YB Vason2 Comments

Have you ever gotten your tax refund and thought to yourself, it’s time to go shopping? I have. Growing up, my mom would take a large part of her refund and she and I would go on a shopping spree…even if it meant driving from mall to mall to find a wider selection or hanging out on a school night. That is how I grew up thinking about refund checks… like some sort of magical windfall of new shoes, purses, and dresses. Now fast forward to the present, I now know it’s better to try to break even than to get a fat refund. In reality, if you are receiving a large refund then you are paying too much in taxes throughout the year.

Divide and Conquer Your Money

If you are like me and you know you will be getting a refund of some sort, it is important to find a better way to spend your money than blowing it on a new tv or handbag. Before you even receive your refund, you should already have an idea of what you may be getting back. Take this time to divide your money, so when you actually received it, you will be less likely to blow it recklessly because you have already decided where it is going. For some, this will take some serious financial discipline, but in the end, it’s worth it! I plan to make my money work for me by using these four categories below to get me started.

Fund your funds. If you don’t have an emergency fund of at least $1000, now is the time to start paying yourself. You should think of this fund like those Chinese finger traps that kids used to pay with- it’s easy to put stuff in and difficult to take things out! If you already have at least a $1000 Emergency fund, then you should take a percentage of your refund and put aside for your savings account.
Pay Down Debt. This is the time to give your “snowball” effect an extra boost. Putting a portion of your refund toward your debt with the lowest APR (annual percentage rate) or lowest balance will help you pay get out of debt faster and feel good about your accomplishments. Remember, you don’t have to have thousands of dollars all at once to start getting out of debt. Every payment above the minimum helps you get closer to your goal.
Take Care of Things You Have Been Putting Off. If you have been meaning to call the plumber over to fix that leak you can’t find (raises hands) or get the brakes on your car checked out (raises hands) or even get the shoes with that weird heel repaired (raises hands) then take this time and money to do it. These are things that people put off because they don’t have the money or time. You now have the money, so make the time.
Prioritize Fun. When budgeting your money, you have to remember to prioritize for things that bring you JOY. Set a goal and when you accomplish it, tap into this category and unleash your fun fund. This could mean buying those shoes you have had your eye on, a spa day, or planning that impromptu weekend with your loved one(s), girlfriends, or even by yourself! It doesn’t have to be big, but it does help if it is something that brings happiness and drives you to work toward your goal.

How Do You Divide Your Refund?

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