Always Manage Your Time And Your Money

There is a concept in personal finance coined by Dave Ramsey as the Debt Snowball. The concept is pretty simple, you make a list of all of your debts from smallest to largest and you pay the minimum required on each item except the smallest. You then make as large of a payment as you possibly can on your smallest debt until you have paid it off. Once it is gone you take everything you were paying, plus the amount paid for your second smallest debt and work towards paying it off. You continue until you are debt free.

I did this earlier in my life when I had some credit card debt, a student loan, a car loan and my mortgage. First step was to make sure I had a budget so I didn't accumulate new debt. After that I was able to pay off everything but my mortgage in about 15 months.

The key with the Debt Snowball is that you need to recognize there are mental games we can play to reward us and motivate us. The strategy isn't to identify the highest interest rate debt or which one gives you the biggest tax break. There may be more fiscally superior methods to eliminate debt but the goal is all about paying off debt. The feeling when you pay off your first small loan makes you want to keep going. It is the quickest win and keeps you focused on the next goal.

This concept works beyond our finances too. There is a Task Snowball and a Project Snowball. We all lead busy lives, at work many of us have more to do in a day than the hours allow. We spread ourselves thin and try to multitask our way to keep everything moving.

Take a look at your to do list and pretend each item has a debt value. You want to order them to the smallest amount of time remaining to the largest. For all of the projects determine what is the minimum amount of time you need to spend per day or week to keep it moving. With all of your remaining energy focus on getting the smallest one completed and off your list. Once you cross that first item off your list you will have more to allocate to the next task, and the next one.

Of course our to-do lists are not like debt, we will never eliminate it. New items will get added, but aren't you better off having fewer items on the list before the next one comes along? There are certain elements in the world like time and money that require us to learn how to manage effectively, otherwise we quickly find ourselves running out of them.


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