From the revered Get Rich Slowly

Nick writes with a common question:

I am a college student with $8,000 of debt. What is the first step in paying this off?

Debt elimination involves three steps:

1. Stop acquiring new debt.
2. Establish an emergency fund.
3. Implement a debt snowball.

Now, finally a post the broke folks among us can relate to. Now this is a more realistic scenario for me to envision. College student……credit card debt………low income. Now it all makes sense!

Some of J.D.’s advice is still a bit hard to swallow. Like when he says you do not need the credit card as a safety net, it makes me tremble. I keep thinking of the times when I seriously needed the money (like for tuition deadlines) and did not have it and the credit card is what (temporarily) saved me. Of course I was stuck paying the bill later on but at the time it really was a safety net.

I especially loved the parts about how to attack your debt because I use the lowest balance approach. This is easier for me and psychologically more effective since I enjoy seeing one balance demolished and it is easier to go from $500 to $0 than it is to go from $2000 to $0.

This is just great information in really simple terms and it is definitely on my list of Raves for the day. I hope Nick keeps us up to date with his progress. I am going to start posting my finances soon so I can track how this is all going. Unfortunately I am not ready to do it just yet because my balance sheet looks so depressing. I am keeping track of everything though and when the assets side looks better (like when I can start investing) I will back post all the juicy details.

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