How Crushing Debt is Like Yard Work

How Crushing Debt is Like Yard Work

This past Sunday, my wife Nicole and I attended our local church’s Financial Peace University class. I had the opportunity to teach this course in January for the first time and now we are supporting our friends who are leading it over the next 8 weeks. It’s so exciting to talk and work with couples who are committing themselves to getting rid of debt from their lives.

When we got home from church, my wife and I had plans to go outside and do a little spring clean up. Clearing brush, wedding, fertilizing, lawn seeding … oh, man! The joy of homeownership, baby!

Before we started, Nicole said the most attractive statement a personal finance blogger’s wife could ever say:

“Andy, our spring clean up job today is a lot of like eliminating debt. We have multiple areas on our lawn that need work. Just like people with multiple areas of debt in their lives. Which area should we start with?”

I didn’t think my love for my wife could grow any more, but that statement – woah!

via GIPHY

Okay, it’s solidified. Nicole’s a keeper.

The beautiful, money-smart mother of my children and I continued chatting about this nerdilicious comparison. We found three areas in our lawn that needed some major work. Those three areas were then compared to three types of debt that the typical person might have.

Bear with me, I’m about to get into the weeds …

(see what I did there?)

Area/Debt #1:  Highest Interest Debt

Our Highest Interest Debt Pile
Our Highest Interest Debt Pile

Through our lawn-to-debt comparison discussion, this weed pile pictured above came to represent a typical person’s debt with the highest interest rate. Let’s say this overgrown weed area is nasty credit card debt with an 18% interest rate that has been building and building over the years because it has never been properly addressed.

Debt Type:  Credit Card  |  Balance:  $20,000  |  Interest Rate:  18%

Area/Debt #2:  Debt with the Smallest Balance

Smallest Debt
Our Smallest Debt

We used to have a dead tree standing in the center of our backyard. It was cut down a few months ago, but we haven’t put down new soil or new seed. It shouldn’t take long! We just need to get to it.

Just like that car loan someone’s been paying down for the past few years! The principal is down to $3,000 and the car is almost owned outright!

Debt Type:  Car Loan  |  Balance:  $3,000  |  Interest Rate:  4%

Area/Debt #3:  Debt with the Largest Balance

Our Largest Debt
Our Largest Debt

The side of our driveway has some ugly overgrown trees that we’ve had since we moved into our house 3 years ago. The area glares at us every time we come home. We compare this area to the student loans a person has had for FAR TOO LONG in their lives.

Debt Type:  Student Loan  |  Balance:  $35,000  |  Interest Rate:  6%

Where Do We Start?

Just like the process for eliminating debt, we’ve now laid out the three lawn problem areas. Now, we need to decide what area to tackle first.

Debt Avalanche

Using the Debt Avalanche method (which Nicole and I did with our debt) makes the most sense to me.

Here’s how the Debt Avalanche works:

  • Take your debts and line them up from largest interest rate to smallest interest rate
  • Pay off the debt with the largest interest rate first by making extra payments each month
  • Given that you’ll now have less interest to pay with one of your eliminated debts, take that extra amount of money and start paying down the principal on the next debt
  • The avalanche continues until all your debt (or lawn work for that matter) is gone

Given this, we would attack credit card debt (Area #1) first. It may take a while, but we’ll stop those weeds from growing at a rate of 18%! After we finished that area, we would attack the student loans at 6% (Area #3) and then the car loan at 4% (Area #2).

Debt Snowball

My bride then jumps in and said, “Or should we go with one of the smaller areas so we can get some quick wins?”

At this point in the conversation, I was so impressed with her debt-to-lawn work comparison that I pretty much offered to do whichever area she wanted. Nicole was referring to the “Debt Snowball” method of lawn work.

Here’s how the Debt Snowball works for debt:

  • Take your debts and line them up from smallest amount owed to largest amount owed (regardless of interest rate)
  • Pay the smallest off first by making extra payments each month
  • Given that you’ll now have less interest to pay with one of your eliminated debts, take that extra amount of money and start paying down the principal on the next debt
  • The process continues with your payments growing larger like a snowball down a hill

If we were to use this method, we would attack the car loan at 4% (Area #2) first. This would take the least amount of time and make us feel accomplished for sure. After the car loan (Area #2) was complete, we would then demolish the credit card (Area #1) and then the massive student loan (Area #3).

Man, this lawn is going to look great when we’re done! It’ll feel like a true load off of our backs. A feeling of Lawn Work Freedom!

Which Method Did We Choose?

While the Debt Avalanche method would have eliminated the highest interest debt in our lawn, I agreed with Nicole that getting some quick wins would really help us to feel accomplished. We decided to go after Area #2 first (happy wife, happy life) and completed it that afternoon while the kids played in the backyard with their cousin.

Hill Kids Biking
Zoey and Calvin Biking Away the Day

Not bad for a Sunday afternoon. Now that the car loan (Area #2) is gone, we can move onto those pesky student loans in Area #3 on Memorial Weekend.

Good luck with crushing your debt AND your lawn work everyone! And hey, if you eliminate enough debt from your life, you can probably hire a lawn service!!


 What debt do you have in your life?

How are you getting rid of it?


 

Author: Andy Hill

Andy Hill, a mid-30’s father of two living in the metro Detroit area, pens the MarriageKidsandMoney.com (MKM) blog taking you through the trials and tribulations of being a young parent and husband who is planning for his family’s future and winning with money.

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