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December 27, 2013

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I used to think paying off higher interest rate cards a better plan but I've been convinced over time that it is not the way to go for achieving success. And it just dawned on me that it could be possible for a debt payor to inadvertently think he has a high interest debt when actually the majority of the balance was accumulated during a time when the card was at a much lower interest rate.

My only recommendation to add would be to continue making your retirement account payments. I THINK Dave Ramsey suggests suspending those when paying off debt and that is the only issue I have with his advice. IMO no one should ever suspend retirement payments. Work your debt repayment around the retirement account payments. You can lose too much earning potential is you suspend those payments for very long.

The steps listed above reminded me of a book I read by Steve and Annette Economides who wrote America's Cheapest Family Gets You Right on the Money. Some of their steps are a bit extreme, but they're just describing their frugal lifestyle practices. Both the above and the Economides advice are great resources in general.

Thanks FMF. Nothing new but good old common sense that I'm always grateful to be reminded of.

You and many others are way further along than us, but we currently have $300k in net assets and have a 8.5 year timeline to pay off all debt including a lot of student loans a rental and home mortgage. It's a long slog but we're doing it.

Thanks again for your blog and the encouragement it provides.

Wow, sure wish Turbo tax would get me an average $2800 refund. Husband retired, I drive a school bus with loss of aprox. $7,000 in cutbacks, have a house payment,pay high property taxes on a very moderate home plus few other things....and still have to pay about $500 more in taxes. Seem like when you lose the child deductions - look out, they really nail you and it's getting where you can't hardly deduct any thing any more. Welcome to he USSA !

Dear G. Reeves, Your husband has retired. What's stopping him from taking a part time job to increase your family's income? He could walk dogs, deliver pizzas (Dave Ramsey's favorite), deliver the weekly shopper newspaper, garden, run errands, clean houses, deliver flowers for the local florist, deliver auto parts of liquor for a local business, work at Wal-Mart or Home Depot a few days a week. Go through your stuff and have husband run a yard sale and apply proceeds to your debts. Retired doesn't mean your husband doesn't have to ever work again. Or sell your house and move to a low tax state like Florida or Texas.

Your post make very good points. I especially like your mention of the emergency fund. There are not many people setting aside money for when emergencies happen. It also should be mentioned that what classifies as emergency. Many people will come up with many ways to spend their emergency fund. Therefore, they should have clear understanding exactly what a emergency is. A good article.

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