Chasing the Bull

By now, most people have heard of the “debt snowball” popularized by Dave Ramsey. The theory is that you should organize your debt from smallest to largest. Pay the minimum payments on all of your debt except for the debt with the smallest balance. For this debt, you attack it with any additional funds available until it is eliminated. Then you move on to the next item on your list.

I had never really paid much attention to my debt. After reading Dave Ramsey’s The Total Money Makeover, I have taken a second look at my debt.

As of today, I have the following debt:

Personal Loan @ 6% - $7,635.17
Student Loan @ 4.25% - $10,368.65

As I mentioned here, I am getting a large tax refund. Additionally, I will receive a tax rebate of $1,500 sometime in June. Finally, I sold the stocks in my cash account for approximately $5,155. In June, I will apply $6,655 from the tax rebate and stock sale to the personal loan. I will also take $238 from my tax refund to pay off this loan completely.

This will leave the student loan as the only debt remaining (besides my mortgage). To tackle this loan, I will take the payments I usually make to the personal loan and add it to the payments I usually make for the student loan. Doing so, I should pay off the student loan by May 1, 2010.

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