Can we talk about blue M&M's?
My co-worker buys a big jar of m&m for the office. They sit on his desk and we all eat them. Yesterday, he asked us not to eat the blue ones, but to set them in another jar. It's for a gag gift or something. Or course, he has to explain this to each person and have them follow along. Looking at the big jar, blue is well mixed all the way to the bottom. Of course, the task will be completed when the jar is empty. However, it's going to take a while and everyone has to remember, follow instructions, etc. It seems like it would be easier to dump them out on wax paper, pick out the blue ones, and dump them back into the jar. Which would you do?
I think it's a good analogy for debt. If I'm in debt I could take a while to pay it off as a I go, take advantage of 90 days same as cash, earn points, remember to make payments, still following the budget, etc. OR I could be laser focused on the debt and get it over in a shorter time with more immediate effort (debt snowball, etc.) Which would you do?
The thought of many different people touching the m&Ms as they sort through their handful & put the blue ones in a jar makes me cringe. Who on Earth wants leftover pawed over candy?
On the other hand, the thought of my dollars & cents being put into different categories & then a small amount collected into a different category makes me happy & motivated to find more leftover pennies. Leftover money is useful! :)Reply
Ben K. said:
If I'm in debt I could take a while to pay it off as a I go, take advantage of 90 days same as cash, earn points, remember to make payments, still following the budget, etc. OR I could be laser focused on the debt and get it over in a shorter time with more immediate effort (debt snowball, etc.) Which would you do?
It depends on interest rates on the debt, and opportunity cost for the money that may or may not be used to service the debt.Reply
More to your question.... I've taken advantage of financing offers, and done debt avalanche payments at different times. A lot of it depends on interest rates, what my cash flow needs are, how much I hate that debt, general level of stress around my finances, etc.
I've done same as cash financing for furniture twice, once with the money saved up ahead & payed out over time, and the other with payments I had to budget for. Even though the payments I budgeted for were the same amount I would have saved if I was saving up, it felt more stressful because I was locked into those payments. I don't think I could ever handle juggling more than one of these accounts or other 0% cards at a time.
I've also opened up credit cards & bank accounts just to meet their requirements for a bonus offer. That can be stressful too esp if there are a lot of things I have to transfer or spending habits I have to change, so I haven't done that in a while.
So there can be an "ick factor" around trying to optimize interest rates, just like with the M&Ms, but different people might reach that point with different activities in their budget.Reply
Earning purchase rewards isn't exclusive to paying down debt. In fact, the incoming rewards probably more than cover the monthly interest on those new purchases if you're continuing to use the card that has a balance.
In all cases, I would still follow the budget. That tells me how much I can afford to send toward debt while maintaining my other financial obligations.Reply