I was never really dumb with money, but I wasn't really smart either. If I had it, I spent it.
For our wedding, my cousin got us Dave Ramsey's book, "The Total Money Makeover."
I think I read most of the book on the plane ride home from our honeymoon (it's a relatively quick read). He has a lot of different strategies in this book- some I agree with and some I don't. The one strategy I applied right away and sort of got the ball rolling on my new mentality was the idea of 'snowballing' your debt.
When I started, I had a car loan and about 4 or 5 different accounts of school loans. They didn't add up to much (which is such a blessing), but it was (and still is) a decent chunk of change to give away each month. I was trying to be smart and pay a little extra on each loan towards the principal each month- $10 here, $15 there. The snowball idea has you take each of your debts and list them lowest to highest. You take everything you were paying extra on each debt and add that to the principal of the lowest balance; so if I had a $2,000 debt, a $500 debt, and a $6,000 debt and was paying the minimum monthly payment plus $20 extra for each one, I would take the extra $60 and apply it just towards the smallest debt, or in this case the $500 one. Once that debt is paid off, you add the entire amount you were paying to the next smallest amount, and so on, basically snowballing your payments and helping you pay off your debts faster. I am happy to say this has been working for us for over a year and I will make my last loan payment in February!
So where should you start? Well, it's going to be different for everyone, but if you are serious in changing your money habits around, perhaps start with some research. Check out some books from the library or read some blogs. Or like me, you can start with one simple change and go from there. Start with snowballing your debt like I did, or simply keep track each month of where your money is going. It's a process, but each process starts with a single step!
Come back next week where I will talk about the dreaded B word... Budget!