It’s no secret how we paid off our last credit card. We just followed the debt snowball and stopped spending with it. We never really used this particular credit card for purchases but you’ll notice we used it for a couple balance transfers. We started the debt snowball in March 2010 so for March and April we just made one minimal payment each month. Then when our snowball finally got to this debt, we bombarded it with payments. Everytime we had a little extra money pop up, we made a credit card payment. Sometimes we made as many as 5 payments a month!  Some were only tens of dollars while others were hundreds of dollars! This was so much fun! Eventually we killed this debt and now we are on to the next (and last) one.

Here is a snapshot of our credit card balances from October 2009 to October 2010. It’s easier to follow the progress if you start viewing the snapshot from bottom to top. I hope it encourages others.

Our progress paying off our last credit card.

I receive this email from Chase the other day. Chase advised me to ‘make a smart move.’ I am… I’m only using cash.

Great Advice from Chase

If you are serious about getting out of debt, there is something you should know yet many people fail to realize it. It must be the very first thing you do and should be easy to grasp but can be difficult to implement.

Just for fun, if you were to Google “ways to get out of debt” you will be presented with many different lists of ways to pay off debt. You might see articles like “9 Ways to Pay Off Debt“, “20+ Ways to Get Rid of Your Debt for Good“, “The 12-Step Get-Out-of-Debt Program“, and so on. These articles are great and make suggestions that can really help but make no mistake, the first step to getting out of debt is as simple as stop going into debt. Sure, the “20+ Ways…” and “12-Step Plans…” will inform you of ways to pay down debt but if you are in a continual cycle of paying down debt and adding more debt, YOU WILL NEVER GET OUT!

Imagine this, you are in a small wooden boat and there is a little hole in the bottom. Water is starting to come in and you slowly begin to sink. Now you have a few options… you can grab that empty bucket beside you and start scooping the water out of the boat only to realize that as you scoop water out, water comes right back in. This can be an endless cycle and eventually you will become exhausted. Another option is to find a way to plug that hole and then to start scooping the water out for good. Of course, I recommend the latter.

The moral of my story is this, if you want to get out of debt once and for all, your very first step must be to stop going into debt. Stop spending on the credit cards, stop the car loans, stop buying things with money you don’t have! Plug your debt hole! I know, it kinda sounds dirty but I want my point to stick with you.

Kill that debt!

Mandy and I still have a while before we make our last payment but I have wondered what life will be like after our debt has been paid off. I sure hope I maintain the same focused intensity when it comes time to save money as I have now while we’re paying off debt. I can’t imagine I’d lose the intensity but we shall see soon enough.

I got to thinking more about this after reading “Life After the Last Payment.” These few sentences really stood out to me:

While you were getting out of debt, you spent a lot of time focused on money you spent in the past. Now you can focus on money you’ll spend in the future!

Soon we can focus on money we’ll spend in the future. I can hardly wait!

Because we had such a successful garage sale over the weekend, Mandy and I were finally able to pay off our very last credit card last night. August 23, 2010 marks the day that we kicked Bank of America Credit Card Services to the curb and the day that we killed our last credit card. We are both extremely excited although it hasn’t really sunk in for me yet what we’ve just accomplished. After all, this is the first time that I can remember not having a credit card balance since we were married nearly four years ago. Another debt killed and only one more to go! I can see debt freedom in the distance. We are getting closer.

Excited to kill debt!

Don't underestimate the power in unity.

Having a ‘plan of attack’ can make life so much easier and the debt snowball is simply that – a plan to attack debt. I was first introduced to the idea of a debt snowball by Dave Ramsey and in my own words I’ll explain how it works.

In the debt snowball method, you list your debts in order from smallest to largest and attack the smallest debt first. Once the smallest debt is paid off, you take the payment you were paying on the first debt and combine it with the payment for the second smallest debt. As debts are paid off, you take the payments you were making previously and apply them to the debt next in line. Your payment amounts will grow substantially, like a snowball rolling downhill gathering more snow.

Many financial experts will advise you to list your debts in order of highest interest to smallest interest. Mathematically this approach is correct but behaviorally it is tough! Once you understand that personal finance is 20% head knowledge and 80% behavior you’ll know why this isn’t necessary the best way of killing off your debts. Paying the smaller debts off first can get the snowball rolling faster and will give you some quick ‘wins’ which will help keep you motivated.

Quick Review

• List your debts smallest to largest (if two debts have the same amount, place the debt with the higher interest rate above the other).
• Make minimum payments on all debts except for the debt that is at the top of the list.
• As a debt is paid off, take that debt’s payment and combine it with the minimum payment of the next debt down the list.
• Repeat until all debts are paid in full.

When you pay off a debt, get excited and have a cost-free celebration. Killing the debt with focused intensity is the key to becoming debt free. Don’t let up!

Write the vision, and make it plain… okay, here it goes.

Kill That Debt .org is a site created by two brothers who are equally passionate about living a debt free life.

Our mission (vision) is quite simple:

• Document our separate journeys to debt freedom
• Share our passion in becoming debt free in hopes of encouraging others to follow
• Introduce creative ways to earn and save money

Adam, anything you’d like to add? If not, to the rest of you… Enjoy!