Anybody want to get debt free????

[Anonymous]

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Boswd wrote:

The snowball effect is the most effective way to pay down debt, but whatever works for you, if you choose the APR way than if that works for you that's cool too.     I feel the snowball is better because by the time you get to your higer balances your snowball will be at such an amount that it will actually make a dent into it and you'll will be able to pay down more debt by paying off smaller ones first instead of waiting an insane amount of time waiting to pay off your larger debt.

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Boswd, I admit I ain't the brightest bulb. I graduated high school in the third of my class that made the top two/thirds possible.

Just not seeing how letting high APR debt ride while paying down lower APR debt jes cuz it's bigger, or smaller, or prettier, is going to pay off debt sooner.

I'm curious to hear the theory behind this.

[Anonymous]

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Noah_Bodie wrote:

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Boswd wrote:

The snowball effect is the most effective way to pay down debt, but whatever works for you, if you choose the APR way than if that works for you that's cool too.     I feel the snowball is better because by the time you get to your higer balances your snowball will be at such an amount that it will actually make a dent into it and you'll will be able to pay down more debt by paying off smaller ones first instead of waiting an insane amount of time waiting to pay off your larger debt.

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Boswd, I admit I ain't the brightest bulb. I graduated high school in the third of my class that made the top two/thirds possible.

Just not seeing how letting high APR debt ride while paying down lower APR debt jes cuz it's bigger, or smaller, or prettier, is going to pay off debt sooner.

I'm curious to hear the theory behind this.

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I think it's the same way that the BoA .2% "change" savings helps you make a fortune.

[Anonymous]

TheNewWorldMan wrote:
Dave Ramsey is a Christian, and thus his advice is geared toward a Christian perspective. So if you believe in Christianity, you will likely find his advice to be sage wisdom. If you don't, you likely won't.

TNWM,

Not trying to ignite a jihad, but can you give a thumbnail sketch of the Ramsey theory insofar as the Christian angle is concerned?

Is it rooted in the money lenders are evil thing? Or the giving to the church and God will give you more go ahead and test me thing?

[Tuscani]

Hold on.. I need to go make some popcorn. This is going to get good.

 

[MidnightVoice]

Noah_Bodie wrote:

Boswd, I admit I ain't the brightest bulb. I graduated high school in the third of my class that made the top two/thirds possible.

Just not seeing how letting high APR debt ride while paying down lower APR debt jes cuz it's bigger, or smaller, or prettier, is going to pay off debt sooner.

I'm curious to hear the theory behind this.

I believe the Ramsey theory is that paying off debt is 80% emotion and 20% logic.  By this reasoning, paying off small debts makes you feel good and is more likely to keep you on track, and you keep clearing more and more small debts.

A feel good approach, but probably not good for those capable of using exel or posting on a forum 

Seriously, I see his point for some people, but I think that the in terms of costs and pure logic it is way off.

Message Edited by MidnightVoice on 07-03-2007 03:41 PM

[Anonymous]

MidnightVoice wrote:

I believe the Ramsey theory is that paying off debt is 80% emotion and 20% logic.  By this reasoning, paying off small debts makes you feel good and is more likely to keep you on track, and you keep clearing more and more small debts.

A feel good approach, but probably not good for those capable of using exel or posting on a forum 

Seriously, I see his point for some people, but I think that the in terms of costs and pure logic it is way off.

Much thanks. Makes sense, and I'm not the person lobbing shots across the bow.

[Anonymous]

You can't talk about money in a vacuum -- there a heck of a lot of psychology mixed up in the process.  That's why they call it personal finance.

Strictly by the numbers, to pay down debt most efficiently, ya gotta pay down the highest APR accounts first.  No question.  But some people need the psychological boost of paying down a smaller account, and then being able to say to themselves, "I feel better now that I have 6 bills to pay instead of 7."  You will never ever convince them that they will save money by paying the high balance, 32% APR account before the piddling 18% APR account.  And even if you do, they won't care.  The number of their bills is more significant that the amount of their balances.

It's the same issue with people who have too much income tax withheld because they like to get a big refund.  You can show them on paper that they can get $300 more per month by doing absolutely nothing other than filing a new W4.  They won't care because they want to get $4000 in February.

It's not always just about the numbers.

[Anonymous]

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masdeocho wrote:

Strictly by the numbers, to pay down debt most efficiently, ya gotta pay down the highest APR accounts first.  No question.

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Many gracias. That I adhere to the higher APR first theory and feel good about it simply proves I'm a cold, unfeeling, heartless, soul-less, shadow-less, reflection-less SOB.

[Anonymous]

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masdeocho wrote:

It's the same issue with people who have too much income tax withheld because they like to get a big refund.  You can show them on paper that they can get $300 more per month by doing absolutely nothing other than filing a new W4.  They won't care because they want to get $4000 in February.

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Once again, my sociopathic tendencies shine through. Just as 1-9 percent util is a sweet spot, owing the IRS a few $20s in April is ideal--for me. Owing a lot hurts and can lead to interest and penalties. But owing a little, again for me the guy with the crawlspace that merits monitoring, gives me perverse pleasure.

[Anonymous]

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Noah_Bodie wrote:

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masdeocho wrote:

Strictly by the numbers, to pay down debt most efficiently, ya gotta pay down the highest APR accounts first.  No question.

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Many gracias. That I adhere to the higher APR first theory and feel good about it simply proves I'm a cold, unfeeling, heartless, soul-less, shadow-less, reflection-less SOB.

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That's why we love you.