DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing Back to the Basics: Debt Hierarchy
Jan 13, 2025
Quint and Allie dive into the intricacies of debt repayment strategies. They emphasize the necessity of an emergency fund before tackling loans. The discussion includes the motivational debt snowball method, focusing on small victories for psychological boosts. They explore behavioral changes needed for effective debt management, alongside the emotional impacts of financial stress. Listeners are encouraged to pace their progress and celebrate small wins on their journey to financial freedom.
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Financial Order of Operations
- Build an emergency fund and fast cash before aggressively paying down debt.
- This prevents derailing your debt payoff plan when unexpected expenses arise.
Murphy's Law in Action
- Quint experienced multiple unexpected expenses like plumbing, appliance, and car issues.
- This reinforced the importance of having an emergency fund for unforeseen events.
Debt Snowball with a Caveat
- Use the debt snowball method, starting with the smallest debt, for psychological wins.
- Prioritize high-interest credit card debt first, regardless of the balance.