I will be referring to some of Dave Ramsey’s methods to debt freedom. Don’t worry, I will explain everything. I will also link his book below if you want to purchase it for yourself.
The first step is called baby step #1, which is saving $1,000 FAST. Did you know 58% of Americans have less than $1,000 in their savings account? I have a separate post on things you can do to save your $1,000 fast! I already have my $1,000 saved so we are on to baby step #2!
Baby step #2 is paying off all non-mortgage debt. Yes, all of it! Credit cards, student loans, medical bills, car loans, etc. This baby step usually takes the longest and I’m sure you can see why. Americans have a lot of debt. I personally have $32,891.28. Gotta love those student loans *insert sarcastic eye roll.*
Now, time for my decision. I have a little over $12,000 in stock that I can cash out and put towards my debt. It’s so scary to think of getting rid of that nest egg. I have researched and researched to help in my decision making. Dave Ramsey often states the quickest way to wealth is eliminating debt. I’m also saving myself a lot of interest in the process. That $12,000 can eliminate all my credit card debt and one of my student loan groups.
On the other hand, my peace of mind of my rainy day fund will be gone. This decision is not easy. It took me about a month to finally make the decision to go forward. I cashed it out and wiped out $12,240.60 worth of debt. While it wasn’t easy, it was exciting to see it gone…FOREVER! Now I just have two more student loans of about $20,000 left. That is still a lot but paying off that large amount has me motivated to knock it out quickly!
Think about what you could do with the extra money once you pay off all your debt. You are basically giving yourself a raise! Would you have made the same decision as me? Comment below and let me know what you would have done if you were in my shoes.
Paying off $12k is awesome! How did you get into stocks? I’m at a point where I think I am ready to dabble into stocks or take the few $k I have saved and pay off a credit card but I want make the best decision. So I guess my question is pay off debt or invest in stock? Great read! TIA
I got into stocks from the company I work for. You can take an amount out of each check to invest in stock and they actually match a small amount. I do $60 every paycheck, definitely paid off in this case because that money would’ve been wasted! I would go ahead and pay off the credit cards because of the interest charges. I going to pay off everything then begin investing heavy.
Yes, I would have made the same decision. It’s lovely to see the money in the account. However, it does no good if you’re still having to pay on stuff that can easily be eliminated. Plus money will accumulate much faster once debt starts being eliminated!
Yep, I totally agree! That’s exactly what I had to tell myself, but it’s so satisfying to see that credit card balance at 0 and entire group of student loans gone!