Have you ever tried to focus on accomplishing five different tasks at the same time? Or three? How did you end up performing them? Were you satisfied with the outcomes?
I am a linear kind of guy. When I try to do two things at once, both suffer. They take longer to accomplish than if I worked one from start to finish and then tackled the second project. If you have ever heard the phrase “the sum of the whole is greater than the sum of the parts”, this describes my multitasking skill!
Paying off debts can be the same. The commercial I hear on the radio about “put an extra $10 towards each of your loans” sounds good. After all you are paying back some extra principal. But when you do this with a car loan, two credit cards and a store loan, you do not see any progress.
I always recommend to my clients that they pick ONE debt to throw their weight against. Pay the minimums on everything else and put the extra principal towards that one account. Highest interest rate, lowest balance, I do not care. I want my clients to see BIG progress against a bill.
When I was in the midst of my debt, I was paying extra towards each debt. And I was getting more and more frustrated. Why? Because I was not seeing any real progress. The extra $50 or $100 towards our car loan did not look like much compared to the $10,000 balance. But when we began to pay $500 extra each month towards our $2000 orthodontist balance, we saw big decreases FAST.
My motto is “Know Debt + KNOW Debt = NO DEBT”. The results you see from seeing that one debt drop quickly keeps your heart in the game (KNOW Debt). This supports your brain (Know Debt) and the two working together will get you to NO DEBT.
Think of the sun. When it shines down on you, you feel warmth. But when you shine it through a magnifying glass, you have the power to burn things!
Or think about boiling water on your stove. If you put a pot of water out in the sun, the water gets warm but only tepid. Put that same pot on a stove and the water begins to boil rapidly.
Focus your extra money on one debt at a time. You will remain excited about your plan towards debt freedom because you will see and feel positive progress. The intensity of that magnifying glass will burn through your debts in no time!