With a close family member being a big Suzie Orman fan, there's always a lot of question over which way is the best method of paying off debt (since that is one of their differences). Today we had another example of why the debt snowball is working for us. With Dave's principle of the debt snowball you essentially maintain the same amount of money you pay on debt each month, you just focus it on the debt with the lowest balance. When that is paid off, you roll that amount over to the next and so on and so on. One of the advantages of this method is that it allows you some flexibility. Because the added amount you pay on the debt isn't mandatory, it provides some wiggle room in your budget when things come up.
This morning we were faced with a almost a foot of snow and a broken snowblower. Tim has repaired it several times in the past few years, but today's was a BIG fix. We would have had to sink another $100-$200 in to fixing it, and then pray that was the only problem. We decided to reappropriate some of our debt snowball money for this month to buy a new one. I'm not sure if that is the approach Dave would say to take, but for us it makes sense. We've actually paid so much extra on our second mortgage that the next payment isn't due until 2015. Even if it was due now, the combination of the amounts we previous paid on our other debts would allow us to pay the minimum and still have some funds for the snowblower. We sort of view is as an alternative to tapping in to the emergency fund. Does that make sense? It takes some time, and a lot of work, but once you get a couple debts paid off it's nice to have some wiggle room with your bottom line.