Is the Micro-Payment For You?
The other day NCN talked about an experiment he did with micro-payments on one of his credit cards during his debt-reduction phase. Firstly let me say that I’m a little in awe of NCN because he’s such a disciplined person with respect to his finances. While I’m quite knowledgeable about mine, I know I’ve got tenacity and discipline issues when it comes to spending my money, so I find reading his blog quite inspiring from that perspective (another person I admire in terms of financial success is Fabulous Financials, because she’s another one who set out her plan and stuck to it.
Anyhoo, enough with the gushing, and back to the micro-payment idea. One of the main reasons I’m intrigued by it is because it’s basically the debt snowball but in reverse. Instead of adding all your snowflakes together before tossing into the snowball of a debt, you end up tossing it directly towards the debt as you receive the money. I don’t know how any of you using the Debt Snowball method do your thang with respect to your payments, but I’ve actually just tossed the money directly at the debt, so I suppose I’m already doing the micro-payment thang. But NCN took it to another level by actually sending $5 every day to his credit card, and managed to reduce his bill by a further $150. He cautioned that some financial institutions don’t allow this much activity on a card, which I find hilarious. How could a lending company not take your money? I suppose in the end it’s more of an administration cost for the lender, but still, there are N number of people sending payments to them every day, so what’s a few more from you? Now if we all did the micro-payment thing every day I could see that we’d probably crash their system, but since I know we don’t all do that, I think they should be able to handle the workload.
One of my freelance writing gigs pays me $10 a post once a week, which adds up to an extra $40 a month that I can throw at my debt. Using the Debt Snowball method of paying down the smallest debt first, this is helping me chip away at it more consistently. I’ve even been taking half of my insurance reimbursements and tossing them at the debt too, and I’ve been making good progress on it. But I like the idea of doing micro-payments, maybe in bursts, to see how that would affect my debt. I might try that once I get down to only 1 or two debts and see how that affects things. Right now I’m too busy juggling it all so I won’t bother. But I’d like to try it one day.
What an interesting idea, I may try it out.