Last week, you did a brave thing! You took a deep breath and added up your assets and liabilities. That kind of honesty with yourself takes cojones, so be proud of yourself and stand tall. You’re in Superhero Training.
You may be wondering, “Now what the hell do I do about it?”
The plan of attack:
Pay yourself first, because a portion of all you earn must remain yours to keep.
As always, knowledge is power. One of the best classics I’ve ever been turned onto is The Richest Man in Babylon by George Clason. It’s a short collection of quick and engaging stories of characters who want to get financially comfortable. Some start off as working stiffs like the sandal maker. He and his friend want gold coins jingling in their pockets. They work hard and make high quality sandals for the villagers, but there’s never any money left over for their own enjoyment and peace of mind.
They approach the wealthiest villager, who agrees to counsel them. Once word spreads, the entire village shows up to hear what the man has to say about getting rich. The first rule comes down to “Pay yourself first, because ten percent of all you earn must remain yours to keep.”
Other characters start off from desperate positions of being enslaved. As the stories come into the modern era, the concern over getting out of debt comes up. These two key points lead to your next action steps.
Step 1
The moment you receive pay, subtract a portion of it and squirrel it into savings. In The Richest Man in Babylon, the ideal is 10%, but between you and me, the number of zeroes isn’t as important as the formula in action.
Putting 10% aside means you’re living on 90% of your income. That’s great! But if you’re having a tough time making ends meet, you may only be able to set aside 5% or 1%.
What matters most is the act of taking sovereign control over a regular portion of your income - whether that’s from your primary job, stock dividends, bond interest, gigs, or side hustles. Put it in a safe, a jar, a piggy bank, or a savings account. A savings account will at least earn interest and start to grow over time.
All I can say on this point is that seeing a bank statement with some zeroes on it in your name will feel like a warm, fuzzy security blanket. Savings acts as a buffer between a person and calamity. I’ve been there.
The other key point I want to focus on is getting out of debt. In the book, Clason’s debt repayment plan is straightforward:
70% of your income is for everyday living expenses
20% of your income is for debt repayment and the monthly payment is proportional to the amount of each debt.
10% of your income is for savings
So let’s say your income is $80,000 a year and your debts total $20,000.
Debt 1 is $5000
Debt 2 is $7500
Debt 3 is $4000
Debt 4 is $3500
There are three methods to choose from, provided your income is greater than your expenses. If that’s not the case, method four is to seek qualified help.
Your Debt Attack Plan: Choose Your Method
The Scenario: $80,000 annual income, $20,000 in credit card debt, dedicating 20% of income ($1,333/month) to debt repayment.
Method | Core Philosophy | How to Order Your Debts | Monthly Payment (Example) | Best For You If... | Key Psychological Benefit |
1. The Snowball | Momentum & Morale. Quick wins build confidence to tackle larger debts. | Smallest Balance to Largest. | Pay min. on all. All extra $ to Debt 4 ($3,500) until gone, then roll to next. | You get discouraged easily. You need to see progress quickly to stay motivated. | Early victories. The joy of closing accounts fuels your discipline. |
2. The Avalanche | Mathematical Efficiency. Save the most money on interest over time. | Highest Interest Rate to Lowest. | Pay min. on all. All extra $ to Debt 3 (24% APR) until gone, then roll to next. | You are motivated by logic, spreadsheets, and optimizing the numbers. | Long-term savings. You win the math game, paying off debt in the cheapest way possible. |
3. The Babylonian | Systemic Fairness & Wealth-Building. Ancient rule-based system that pays debts while building savings. | Proportional to Balance. Each debt gets a share of your payment based on its size. | Debt 2: $499.88 Debt 1: $333.25 Debt 3: $266.60 Debt 4: $233.28 | You value discipline and a holistic plan. You want to attack debt and save simultaneously from day one. | Sovereignty & Balance. You follow a time-tested "law" and never raid your savings to pay debt. |
4. The Triage | Strategic Intervention. For when the battlefield is unsustainable. | Seek a Unified Front. Combine debts into one managed plan or loan. | One single payment of ~$1,333 to a counseling agency or consolidation loan, often at a lower negotiated interest rate. | Your minimum payments exceed your income or you are at risk of default. You need relief to even start. | Peace & Structure. Turns chaos into a single, manageable plan with a clear end date. |
📊 Detailed Payment Tables for Each Method
Here is how the first 6 months of payments would look for the primary methods, highlighting their different rhythms.
Assumed Minimum Payments: Debt 1: $150, Debt 2: $225, Debt 3: $120, Debt 4: $105. Total Minimums: $600/month. The extra $733 is the "attack" payment.
The Snowball Method (Attack Smallest Balance First)
Month | Focus Debt (Debt 4) | Other Debts (Min.) | Debt 4 Balance | Key Milestone |
1 | $838 | $600 | $2,662 | |
2 | $838 | $600 | $1,824 | |
3 | $838 | $600 | $986 | |
4 | $838 | $600 | $0 | ✅ DEBT 4 PAID OFF! |
5 | Roll $838 to Debt 3 | $600 | Debt 3 under attack | Morale boost! |
The Avalanche Method (Attack Highest Interest First)
Month | Focus Debt (Debt 3 @ 24%) | Other Debts (Min.) | Debt 3 Balance | Key Milestone |
1 | $853 | $600 | $3,147 | |
2 | $853 | $600 | $2,294 | |
3 | $853 | $600 | $1,441 | |
4 | $853 | $600 | $0 | ✅ HIGHEST INTEREST DEBT GONE! |
5 | Roll $853 to Debt 1 (22%) | $600 | Debt 1 under attack | Most efficient path! |
The Babylonian Method (Proportional Payments)
Month | Debt 2 | Debt 1 | Debt 3 | Debt 4 | Key Principle |
1-6 | $499.88 | $333.25 | $266.60 | $233.28 | Systematic & Predictable. All debts shrink in harmony. No "focus debt," but Debt 4 is still on track to be first paid off in ~Month 17. |
Your Mission & The Choice
Your mission this week is to choose your method. Look at your list from last week. Be honest about your personality.
Are you motivated by...
...crossing a finish line? → Choose The Snowball.
...beating the system at its own game? → Choose The Avalanche.
...following a time-tested, balanced law? → Choose The Babylonian.
...getting professional help to stop the bleeding? → Choose The Triage.
Hit reply with your chosen method: SNOWBALL, AVALANCHE, BABYLONIAN, or TRIAGE. I'll use your answers to shape future issues.
What’s Happening Lately
My first installment payment went through the debt consolidation counselor and my creditors got their money - $906. Whew!
Savings is on life support, but I set aside something for the cash cushion, too.
Two rungs up. The upward climb is on.
To rising joyfully,
April
Disclosures & Disclaimers
I am not a licensed financial advisor, attorney, accountant, or credit counselor. The content provided in Joyful Rising Money IQ is for educational and informational purposes only and should not be construed as professional financial advice.
The information presented is based on my personal experience and research and may not be suitable for your specific situation. You should consult with a qualified professional before making any financial decisions or changes to your strategy.
Past performance is not indicative of future results. All investments involve risk, including the potential loss of principal.
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