The Envelope Please!

It's been a long time coming, but we managed to finish off our first of 35 envelopes this week. We decided to sell our dust-collecting Wii on craigslist and got $150 out of it.

On the inside of the envelope the card read,

"$1,000 paid off $34,000 to go! We have a long road ahead of us but I know we'll make it!! ROADTRIP- QuikTrip drinks to celebrate the first of many steps!"

We always get a quiktrip drink on our way out of town to visit family or go on a long trip, so it is fitting for us to start this long journey with a QT drink! The neat part about paying off this past $1,000 is that it marks $25,000 of debt gone since we started this 3 years ago. I have a feeling if we wouldn't have put it toward debt, we would have nothing to show for it now. So glad we chose the road less taken, it feels so good!

Envelope #2 has $891.49 left to pay off. Good news though...our tax refund is pending in our checking account right as we speak. After a friendly car repair, we have a big chunk going to debt. I have a feeling envelope #2 isn't going to get settled in on our fridge!! YES!

In 1 Month...

It's been a month since we had to buy Chris a new car. Since then we have been putting all our extra money to build our $1,000 emergency savings back up. In the last month we only made the minimum payment to each of our 3 student loans. As of yesterday, we now have a fully funded emergency fund (yay!!) and we are ready to start paying off debt again. We call this snowballing.

Dave Ramsey's strategy for efficient debt pay-off is to put your debts in order from the smallest amount owed to the largest amount owed. Start working on the smallest one first, making only minimum payments to the rest. As soon as the smallest debt is paid off take all of that money and put it toward debt number 2. It's a snowball effect. When we started paying off debt we didn't have much of a snowball because all of our money was spread out over several debts. Now that we are only down to 3 debts our snowball is huge compared to what we used to snowball!!

The encouragement in the beginning was to be able to pay off small debts quickly and be done with them. Now since we are at our largest debts, they don't go away as quickly, but we see this huge chunk of money that someday will be ours to choose where it goes! We could literally send someone from our church to the Philippines every 2 months with our snowball right now. We can chose to do that someday when our money is ours again!

Oh and that $1,000 envelope hanging on our fridge- it only needs $50.79 to open it. Read about our envelope motivation system to finish our last $35,000 of debt in one of my older posts.