Stacking Debt

Just playing with some free apps trying to build my brand! Cream & Sugar is a fun one, and did I mention it is free? Well, free for a very basic package, and honestly not that much more for the full package, but since I am on a shopping ban, free it will be!

Slideshare.net does a smash up job explaining the difference between stacking debt and snowballing debt.

However, you may not have credit card debt, but perhaps a loan or line of credit, or God forbid one of those money lending spots which give you fast cash to get you through to your next pay.  Stacking Debt is the most logical plan of action as depending on how high your highest interest rate may be on the money you owe, it could be draining your bank account at a rapid rate.

Like I said in my Snowballing Debt blog, some credit cards have interest rates as high as 20% yet only ask for you to make a minimum payment of 2.5%, if you max out one of these cards, you can be paying that debt down for a very long time and even pay way more than you ever dreamed of because of the high interest! Not worth it!  Only if you are a responsible shopper, then you should avoid those reward cards such as airmiles rewards, aeroplan rewards; they are only great if you pay the balance owing each month.

Can’t afford it? Then don’t buy it! Hey, I can justify almost every purchase I have made in the past at the time when I bought whatever it was, but having debt it is like a ball and chain.  Do I regret my purchases, some of them, absolutely yes!

I am being a lot wiser with my money now. I paid for my trip this October to Italy on credit card, but I paid that off almost right away.  Next trip I book I plan to have money saved to put directly on my Visa after I complete the transaction.

From now on any large ticket items I will be saving for, because the truth is if I don’t have the money (cash) and I want to be debt free, I will have to suffer and go without. As being in debt is like being sentenced to a type of prison; the inability to travel, go for nice dinners, shop for a new suit, as when you do it is not taking you where you want to be, which is the road to debt free.

Not to mention, we should all have an emergency fund whether it be to cover the cost of your monthly bills and mortgage (rent). We are living in uncertain times and prices are inflating on our most basic needs such as groceries.  You don’t want to end up in a situation where a few months are rocky financially; you want to prepared.

More financial tips will be coming your way soon!  But if you are trying to come up with a plan on paying down your debt and you have multiple piles of debt, the best option is to hit the highest interest rate bill as hard as you can, and then move onto the next highest and so forth.  Good luck & be a mindful shopper.

Peace & Love – Rachel x