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« Free Money Finance March Money Madness, Round 1, Posts 21-24 | Main | Not Enjoying Your Wealth »

January 29, 2011


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I think whatever works for people. This method sounds like a slight twist on the basic snowball. It too seeks to get the snowball rollong, psychologically. I guess debt repayment is getting to be like diets, lots to choose from.

Why the lowest debt? Why not the one that is charging the highest interest and costing you the most?

Matt: Paying off the highest interest first is mathematically superior, but if people operated in a purely logical fashion they probably wouldn't be in debt in the first place. Paying off smaller debts first addresses the psychological aspect because you get "wins" more quickly as you eliminate debts.

Not only is this not a new idea in general, it's not even new for Bach. He used this exact name and calculation in one of his earlier books. (Not sure which, but I think it was Start Late, Finish Rich in 2006.)

The arbitrage and psychology for how to repay debt has been around for a while. I think it varies for each individual and how they got into debt. The point though is that they need to actively attack the problem and ignoring the monthly statements will only add late fees, which will make the cycle more vicious. I think there is also a tendency when you hit your limit to just switch to a different card, rather than assess if it is really something that falls into an essential category - shelter, food, warmth. Many times people feel they are "owed" or "earned" the right to go shopping.

I agree that this is the Dave Ramsey snowball and is nothing new (hopefully he doesn't make a mint off of someone else's concept). We used the Dave Ramsey baby steps and paid off our house in September of last year after about 3 1/2 years on the plan. I agree with the psychology of knocking off debts so you feel there is momentum. Once you get going it really does become a game and you knock out your debt faster than you'd ever think.

We've been (literally) DEbt Free for a few years now. The way we did it was similar to this (killing those smaller ones first, making sure all high interest debts were transferred to lower interest, etc, etc,etc....).

I don't really have much to add ot this. Well posted, and good info. people can use IF .... if they are really trying to live a better life a goal of becoming debt free.

Debt Free can mean many things. And depending on the amount of money one makes - whether a single income or a combined income (married or similar) - you can enjoy being able to do just about anything you want to do. And that DOES NOT mean going out and buying all the things you've dreamed of owning OR all the little toys (electroics, etc.) that all your friends are "accumulating." You have to know what is worth having and what is really just a gadget to bring you up to the latest and greatest way to text someone. (Note: I still do not use a cellphone, but I do not need a cellphone for my business, and especially for my personal encounters. I see the need for emergencies, but not like people who "need to know it now" when it could wait (probably? 5-15 min's until I get home or to work. Maybe I'm just that much more organized? Maybe I'm that much more secure that I won't lose friends because I can't hear them *blab* or *text* now? Are my driving habits, work habits and social habits much more geared to anything not a device? LOL)

To be debt free might mean not having cable. Instead, it's Netflix. Monthly cable, and some of the cellphone plans are big money eaters. And that's just the beginning....

To be debt free could mean the difference between $20 in your checking account... or $20K in your checking account. yes, that snow balls as well if you are smart. And that's just what is in your checking.

Getting out of debt could also mean that you show a confidence in yourself. And employers can pickup on that. As well as plenty of other contacts one will encounter. It also does NOT mean you are picking up the bar tab for all your hyper consuming friends either. let them go down in their own ship ... or, you can be an example of what good living is truly all about.

Even those with over $100K of student loans. That will be a challenge, but it can be worked out. You will just have to stop living - and playing - with the funds not used for your priceless education. Get to work and finish it (the education plan, right?) and then begin working at the job you wanted .. the one that was worth getting into such debt in the first place. It's easy to fool yourself and think "I need this (or that)" and misappropriate those student loan funds elsewhere. *** NOT!!!! *** and that's why you are already on the road to being in debt for years and years to come.

(I'm obviously assuming that people in debt are reading this post or any of the other ones, HA!)

It all starts with baby steps, or that one small debt that you pay off, or .... or whatever one wants to label it as. One can't be "penny-wise" but still spending "Dollar-Stupid." As Forrest Gump would say, "Stupid IS what Stupid DOES." Why be like that? It doesn't start with the program ... it starts when the person makes the conscious thought process to change. Change adds up in many more ways that just (the obvious)!


We read Dave Ramsey's "Financial Peace" in the 90's and did his "snowball" method. It worked.

Paying off the lowest balance did help us get those early victorys which were great encouragement. It's not the mathematically best way but again it worked for us. This DOLP method sounds interesting. If it helps folks get out the of burden of debt then this is a good thing.

Interesting concept but in a way foolish.

But I understand in it was diffacult to explain to my in laws that when they got a lump sump payment for them selling a handicapped vehicle to pay off there credit cards first and then there other vehicle because they wanted to pay off there vehicle first because it was $375 a month and there CC was only $200.

I guess that is why the only debt I have is my house at 4.75% interest and it should be paid off in 2 years.

Seriously?? There vs their vs they're

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