A few weeks ago I blogged a bit about some steps I'm taking to accelerate the retirement of various debts that I have. That's going well so far and as the balance of my debts fall, can only get better.
I have come up with another idea for tackling debt that I want to share, and that is to "round up" purchases to set aside extra bits of money to apply to one's debts. I got the idea from Bank of America's "keep the change" program, which is simply a feature of their debit card service - when you make a purchase with a BoA debit card, say for $4.37, $5 is deducted from your checking and the difference - .63 cents as per this example - is placed into your linked savings account. BoA gives you a small match on that amount and pays you a laughable amount of interest within the savings account itself. It's a neat idea, but the return you get on your money is so lousy that there's not much reason to do it.
It occurred to me though that I might be able to use the basic idea for my own purposes, so I've been doing so for a few days now. I use a rewards credit card for purchases and I track my expenditures on a spreadsheet, but now when I deduct purchases and whatnot from my presently available cash, I round them up. At the end of each pay cycle, I simply subtract the amount my spreadsheet says I should have left from what is actually in my checking account, and use the difference to pay off the new transactions I've put on my card. The rounded up amounts will then leave a further remainder, and this is an amount I can use to retire a bit more debt.
This produces only a trickle, I'll admit, but it's a bit more cash added to what I'm already putting toward my debts, and together these sums are significant. As my smaller debts disappear and these efforts snowball, the larger debts will go faster and faster. Once they're gone, I can use the cash I've been putting toward them into income producing investments instead. Thinking ahead to that makes all of this effort worth it.
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