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Dave Ramsey’s Snowball Method vs. Suze Orman’s Method for Getting Out of Debt

By JLP | February 20, 2007

Here’s Dave Ramsey’s Snowball Method for paying off credit cards:

Step 1 – Make a list of all your credit cards, ranked in order from the highest balance to the smallest balance.

Step 2 – Beginning with the card with the smallest balance, pay as much as you can on that card while paying the minimums on the other cards.

Step 3 – Once the card with the smallest balance is paid off, take the amount you were paying towards that card and apply to the card with the next lowest balance.

Step 4 – Keep on keepin’ on until ALL the cards are paid off.

Now, contrast Dave’s Snowball Method with Suze Orman’s Method found in The Road to Wealth:

Step 1 – Figure out the largest possible amount you can afford to pay each month toward all your credit card balances together.

Step 2 – Add $10 to each minimum payment that your credit card company is asking you to pay.

Step 3 – Add up all your minimum payments plus $10 added for each card.

Step 4 – Hopefully the difference between the figure found in Step 1 is GREATER than the figure in found in Step 3. If so, apply the difference to the card with the HIGHEST interest rate.

Step 5 – Once that card is paid off, you continue the process (Steps 1 – 4) until ALL the cards are paid off.

Which method’s the best?

Dave’s Snowball Method is great for boosting self-esteem since it gives you a great feeling when you have paid something off. It’s also a great feeling to take the amount that was applied to the smaller card balance and ADD it to the payment on the next smallest card.

Suze’s method makes the most sense mathematically since you are concentrating on the card that is costing you the most. And, once you get that card paid off, you can start on the next card. I also like the fact that you are paying MORE than the minimum payment each month, which is pretty much ignored with Dave’s Snowball Method.

The main thing to take away from this is to get your cards paid off as soon as possible. The method won’t really matter that much when it’s all said and done.

What do you guys think? Do you prefer one method over the other?

Topics: Basics, Budgeting, Credit, Credit Cards, Dave Ramsey, Financial Planning | 79 Comments »

79 Responses to “Dave Ramsey’s Snowball Method vs. Suze Orman’s Method for Getting Out of Debt”

  1. Foobarista Says:
    February 20th, 2007 at 8:23 pm

    I was never in this situation myself, but from what I’ve seen on various “credit discussion” websites, the usual answer is some of both. People start with the more “emotional” strategy of paying off CCs early, and once they’ve got the discipline down, they shift to the interest rate strategy.

    Another strategy, which combines the emotional gain from seeing concrete progress with the mathematical advantages of “highest-rate-first” paydown is to make a paper “debt chain” with “links” representing $1K of one’s debt. As the debt is paid down, the “links” come off until the “chain” disappears.

  2. JLP Says:
    February 20th, 2007 at 8:26 pm


    The debt chain idea is pretty cool. I hadn’t heard of that before.

  3. Duane Gran Says:
    February 20th, 2007 at 9:21 pm

    From a purely mathematical standpoint, paying down the card with the highest interest charge makes the most sense, but psychological elements are valid considerations. I personally feel that both angles should include picking up the phone and asking the creditor to lower the interest rate. Alternatively one might be able to transfer balances from a high interest note to a lower one.

  4. dimes Says:
    February 20th, 2007 at 9:38 pm

    I like the Suze way, though I’m not opposed to the snowball method if, say, your highest interest rate is also the highest balance by far. It *is* rewarding to pay something off eventually.

  5. Aimeeroo Says:
    February 20th, 2007 at 9:39 pm

    Personally we follow another kind of snowball all together, Mary Hunt’s version. In this one, you figure out which balance will pay off first based on paying the min. due right now, and tackle it in that order. However, we also are very active at moving our balances to low rates, and 0% rates, which isn’t addressed in her system. I think that if you did Dave’s, but also took into account the rates your paying, you would be fine.

  6. A Silver Lining - The Debt Repayment Debate Says:
    February 20th, 2007 at 10:08 pm

    […] JLP at All Financial Matters today pits Dave Ramsey’s “snowball” method of debt repayment against Suze Orman’s highest-interest-first method. You can read his blog post here for a nicely succinct summary of both methods. Basically, Ramsey advocates paying the smallest balances first while making minimum payments on everything else, and Orman advocates paying the highest-interest debt first and making payments just a hair over the minimum on lower-interest balances. […]

  7. ericm1000 Says:
    February 20th, 2007 at 10:23 pm

    How about a combination of Daves method with Suze’s. Pay off the ones with the lowest balance first (keeping that feeling of accomplishment up), but pay more than the monthly balance as Suze suggests. Best of both worlds.

  8. Rob Says:
    February 20th, 2007 at 11:03 pm

    Perhaps list all debts under 10-20% of your total debt.
    Line those up in Interest rate order and pay them..
    Then line up the remaining debts and pay them off in interest rate order.
    Quick wins/low hanging fruit for morale – but then reinforcing the pay off the highest interest rate line…

  9. Emma Says:
    February 20th, 2007 at 11:04 pm

    I think something needs clarification for some folks, like AllFinancialMatters, about the Dave Ramsey’s Debt Snowball method. When you stated that you “ the fact that you are paying MORE than the minimum payment each month, which is pretty much ignored with Dave’s Snowball Method” it is incorrect. If you actually look at what Dave teaches, the underlying theme to his financial teachings is that people need to do a budget first and foremost. That is before even doing the debt snowball.

    Why? By doing the budget, you will be able to find places where you can cut back and move money into the paying off debt. Once the budget is in place, you start working on your debt snowball. Freeing up as much money as you can, to throw at the debt. That means that you’re not just making minimum payments as is stated on your post, but creating extra money to increase the payments you can make on the “targeted” debt.

    In reality, it doesn’t matter what you or I think about which plan is best, because certain plans fit certain people. If you’re a math geek and enjoy the whole number thing, you might just like the “highest interest rate” plan. If you’re the type of person that wants some “quick wins”, then the debt snowball might be right up your alley. At the end of the day, when each plan is actually implemented as it is intended, the debts will be paid off in about the same amount of time.

  10. EMF Says:
    February 20th, 2007 at 11:40 pm

    I would use a mixture of the two methods as well. You should consider that the cost of the stamp adds to the interest rate. Not the mention the hassle factor — a biggy for me. Not being otherwise in debt, I pay my water/sewer/garbage bill (which averages $25 – $30/ month) 6 months in advance saving the cost of 5 stamps ($1.95) and the joy of not having to write 5 checks (priceless).

    I’d concentrate on getting rid of the debts that are less than $200, and then hit the remaining debts in the order from highest interest rate to lowest interest rate. This could quickly reduce the number of debts you have to track and the number of checks to write each month. Also, I believe that some loans such as car loans are amortized according to the rule-of-78, which means that the effective interest rate is higher earlier in the loan period and lower toward the end. So if your car loan is due to be paid off in 6 months, concentrate on other debt first and let the car loan expire naturally.

  11. CRM Says:
    February 21st, 2007 at 12:13 am

    Dave Ramsey is a clown. Suze is a part-time clown. The best method is to pay off the highest rate card first and the minimums on all the other cards, then snowball the payments to the next highest rate card, and so on, until all cards are paid off. The “satisfaction” one might gain via Ramsey’s method could be at the expense of lots of extra interest. Imagine I have 3 cards: 1) with $10,000 @ 19% interest; 2) with $5,000 @ 10% interest; 3) with $1,000 @ 5% interest. It may be “satisfying” to pay down card #3 over the course of a year or so, but I would have racked up almost twice as much interest on card #1 in the mean time as I had paid off on the 3rd card. I would actually end up owing MORE at the end of a year (or a given period) than I had started out owing–but my ESTEEM would be oh so enhanced! 😉

  12. db Says:
    February 21st, 2007 at 3:20 am

    CRM, I’d suspect that under Dave’s plan, if it took you 12 months to pay off your $1,000 card @ 5% interest Dave would be yelling at you to go get a part time job delivering pizzas so you could pay more on your debt!

    Seriously, though. Dave wouldn’t have you paying the MINIMUM on the debt you were snowballing, he’d have you through every available dollar at it. You only pay the minimums on all but one of your debts, the one you are currently snowballing. What’s clownish about that?

  13. Leslie Turek Says:
    February 21st, 2007 at 6:29 am

    One suggestion: Depending on your credit rating, you might be able to get a debt consolidation loan at at a rate lower than any of your credit card rates. Then pay off your high-interest credit cards and concentrate on paying off your prosper loan.

  14. Tom Says:
    February 21st, 2007 at 7:51 am

    The most important thing is to stop using those cards or all the games in the world will not get the debt down. I suggest to people that they select one card for any convenience charging that they pay off every month no matter what. Then use one of the above techniques for eliminating the other cards, one at a time.

  15. Easy E Says:
    February 21st, 2007 at 8:22 am

    CRM has it right. Neither method makes the best financial sense.

    Personally I like to keep feelings and emotions out of financial decisions. If you need to consider either of these methods then you probably aren’t leaving emotions aside in your financial life. I mean the reason for the outrageous credit card debt in this country is because of emotional purchasing. Someone needs to teach these people how to leave emotion out of it and to concentrate on using their brains.

  16. Steven Farrar Says:
    February 21st, 2007 at 8:54 am

    Although I’m not a sophisticate, we have paid down $123,000 of consumer debts (student loans, car notes and some cc’s).

    We tried the Suze way, however we never got that push to continue, that boost to clean up the mess. Started on Dave’s plan, and we’re now debt free, except our home, and can now increase our net worth by around 3k every month.

    Before, as we were ‘managing our debt’ we were treading water.

  17. Jesse Says:
    February 21st, 2007 at 9:01 am

    My debt payment plan is very unique, and it takes only one step:

    Step One: Be Intense.

  18. Emma Says:
    February 21st, 2007 at 10:28 am

    Easy E, it’s called personal finance for a reason.

    Leslie, debt consolidation doesn’t fix the behavior that caused the debt in the first place. Until you fix the problem, the debt consolidation loan will only add to the debt load. Debt consolidation is America’s attempt at microwaving their debt. It’s not an overnight thing. It takes time. And, you’re not really paying any debt off, you’re just moving it.

  19. JLP Says:
    February 21st, 2007 at 10:57 am

    I’m not a fan of debt consolidation UNLESS you can get a really good rate and are determined NOT to pile on more debt by using those freed-up credit cards.

    Do the math. If you can get a great rate by consolidating, then by all means consider it. It is nice to have one payment but I wouldn’t make that the only reason for consolidating. As Emma says, all you’re really doing is moving money around.

  20. MikeK. Says:
    February 21st, 2007 at 11:20 am

    I think this issue is 99% emotional, and 1% rational. People get into serious CC debt not because they are making rational financial decisions, but rather making emotional financial decisions. I think the roll up method is completly appropriate in this case because people struggling to pay off CC debt need all the emtional motivators they can get.

  21. Sam Says:
    February 21st, 2007 at 11:24 am

    Because of the popularity of David Bach’s books and systems, it be interesting to see how his DOLP method of paying off credit cards would do in comparison to the early mentioned systems.

  22. Matt Says:
    February 21st, 2007 at 12:43 pm

    I like the snowball method personally when you’re at the point with being in debt where you’re barely making your payments and don’t seem to be making headway having a card paid off is like having a great burden lifted from your shoulders. Once you do that you end up believing in yourself and once you’ve got that then you will try to keep the feeling/momentum going. The snowball starts going faster and faster until you’ve got no debt left.

  23. Miguel Says:
    February 21st, 2007 at 3:46 pm

    I think MikeK said it best: “…this issue is 99% emotional, and 1% rational.” Whatever method provides the best emotional incentive, regardless of the comparative expense, is likely to provide the fastest, longest-lasting results.

  24. The Simple Dollar » The Simple Dollar Morning Roundup: Middlesex Edition Says:
    February 22nd, 2007 at 7:31 am

    […] Dave Ramsey’s Snowball Method vs. Suze Orman’s Method For Getting Out Of Debt Okay, I did the math here and you know what? It depends on the debts. There are situations where Dave’s method is faster – and there are situations where Suze’s method is faster. If you, constant reader, are interested in the math, leave a comment and I’d be glad to flesh this out into a post. (@ all financial matters) […]

  25. 4rest Says:
    February 22nd, 2007 at 10:55 am

    I know one thing that Dave usually mentions in connection with the Debt Snowball is a yard sale. He basically says to sell so much stuff that the kids get worried about being sold next. If you have a bunch of smaller debts, a big yard sale could knock out a lot of bills at once and reduce the risk of missing a payment and getting slapped with a extra charges that go through the roof. As much as I trust the US Postal Service I would feel better reducing the risk of a payment getting lost in the mail. That’s why I like the snowball method better – especially in cases where the math is really close.

  26. Tim Says:
    February 22nd, 2007 at 12:50 pm

    breaking your past habits that got you in debt is the key element. In the end, it really does not matter how you get out of debt. You may have to pay longer or pay more interest, if it is going to get you into the mindset of paying and as well as giving you mental boosts in achieving goals. What you want to establish are the fundamentals for remaining out of debt. That comes from budgeting and being systematic repaying your debt. Either is fine, which ever method will break old habits of spending and not budgeting is the key. People fail to maintain budgets or repay debts, because everything is lumped together. In either method or whatever method, you need to be able to see debt in smaller lumps. You are going to be pretty negative about your chances of climbing out of $50k debt, but more postiive about your chances to climb out of $5k here, $5k there. Goals need to be achievable and manageable. Much of getting out of debt is psychological as with anything thing you are trying to achieve. You cannot leave emotion out of it, because chances are you spent frivolously in the first place, which got you into debt. That is emotional spending.

    As far as Suze’s method, from a mathematical point of view it is still not optimized. if, as JLP wrote about number of credit cards being averaged to 10 per person, means that you are using $100 extra every month just on other credit cards where you could direct that $100 towards the higher interest card.

  27. Dean in Des Moines Says:
    February 23rd, 2007 at 10:42 am

    If you are in debt, you haven’t been living life by the math, so you are unlikely to get out of debt that way. Dave’s plan harnesses the motivations you already have and aims them toward debt reduction.

  28. AllFinancialMatters » Blog Archive » Does This Make Any Sense? Says:
    February 23rd, 2007 at 12:32 pm

    […] A reader left the following comment on my Dave Ramsey vs. Suze Orman post: If you are in debt, you haven’t been living life by the math, so you are unlikely to get out of debt that way. Dave’s plan harnesses the motivations you already have and aims them toward debt reduction. […]

  29. MARLENE Says:
    February 23rd, 2007 at 12:55 pm

    Not sure what the previous reader meant by not “living life by the math”. Unless the reader meant not living within your means.

    One way to get a psychological boost by paying a higher interest rate debt first is by looking how much less in finance charges you pay.

  30. Joe in NYC Says:
    February 23rd, 2007 at 8:21 pm

    Live within your means. That’s always been my solution.

  31. Mill City E Says:
    February 24th, 2007 at 7:17 pm

    The snowball method has a higher cost over time than the Orman method, but in addition to the psychological benefits it may be lower risk in that it frees up cash flow more quickly. This might help someone avoid going further into debt if they have an unexpected expense, though it may increase temptation to spend the extra cash for someone struggling with financial discipline.

  32. Bill in Texas Says:
    February 25th, 2007 at 7:05 pm

    “Suze’s method makes the most sense mathematically…” Dave also says that if go purely on math, we wouldn’t be in debt in the first place.

  33. Christian Finance Says:
    February 28th, 2007 at 10:00 pm

    Dave Ramsey has never claimed that his method is the best way mathematically to get out of debt. His is the better psychological plan because it gives you early “victories” so you can feel good about yourself and be more motivated.

  34. Don Says:
    March 13th, 2007 at 8:28 pm

    One advantage to Dave’s plan that no one has mentioned.: If you pay off one card and have a single unexpected expense, you can in fact charge it on a card that has been paid in full. Unlike charging on another card, you’ll now have the grace period before accruing charges.

    Now I know people say “stop using the cards.” And I’ve never been in credit card debt that couldn’t be paid off in 3-4 months. But you do seriously have about a month of float on a card that is in good standing and being paid in full every month and that is something you can use to your benefit.

    Another thing that matters. If you get paid on the 1st of the month and your card is due on the 20th of the month, just make your payment right away at the 1st. Interest on credit cards is average daily balance, and you bring your balance down almost 3 weeks early. It certainly makes more sense than letting that money sit in your checking account earning nothing and then paying at the last minute.

    Notice, if you have an empty credit card with float, you’d be covered if you happen to overestimate and pay a little more than you could afford because you didn’t expect some expense. Next month, when the 1st of the month comes, pay your “emergency” card off in full and go back to slugging it out against your other balances.

  35. Marcel Says:
    March 25th, 2007 at 9:09 pm

    If the problem was a mathematical one, there would not have been a problem to start with because the person would not have gotten into debt in the first place. Therefore, the problem is attitude. Your attitude will determine your altitude. In order to change the attitude, Dave’s plan is the best. It is like loosing weight, as you are seeing results you get more motivated and lose more wight and get in better shape. Same thing with money, start with the one you can pay off the fastest and keep going, you will get motivated and nothing will stop you then.

  36. MikeJW Says:
    May 14th, 2007 at 12:49 pm

    Here’s why Suze Orman’s way is a no-brainer: The “higher interest rate” first method, rather than the “lowest balance” method, tackles what should be the higher calling from a psychological standpoint — paying the lowest total cost for the mess one got themselcves into in the first place ! On a smaller note, as I read the above comments, I saw many pooh-pooh her “another $10 over the minimum” guidance, but noone recognize the extremely positive reason for it. As I understand it, our credit ratings are based partly on how we pay our debt off, that is, our scores are specifically lower if debt reduction is based on a history of just paying the minimum balance. Paying that $10 a month more than the minimum is a black-and-white factor in the formula for our credit scores that — certainly along with other factors — helps to increase the score. MJW

  37. Ted Dancel Says:
    June 7th, 2007 at 6:12 pm

    Ramseys and Ormans methods are both ridiculous. It is not helping people to stay away from debt but rather encourage them the use credit cards more often than necessary.

    “Make a list of all your credit cards, ranked in order from the highest balance to the smallest balance”… How many credit cards a person should have in order to manage his finances wisely? You might just be joggling your credit card bills instead of getting out debt.

  38. chris Says:
    July 7th, 2007 at 3:43 pm

    Well Dave’s USED to use the highest interest card as his method also. But when he had thousands of people call and ask why they felt thet were not making any headway, he felt like he needed a change. if you get gazelle intense on the snowball, you will really not do any worse that the ormans method.

  39. chris Says:
    July 7th, 2007 at 3:47 pm

    ALSO Dave’s your missing the rest of dave’s plan. The very first part of step 1 in his 7 steps is to NOT ADD ANY MORE DEBT! So you see that Ted doesnt seem to understand that Dave’s Snowball is the secind step and not a total solution by itself. You should read some more there Ted!


  40. Felix Says:
    September 26th, 2007 at 6:43 am

    People who have never had the wolf calling 10 times a day stand out like a sore thumb in here. Ted and Don especially need to pick up Dave’s book to understand what Financial Peace is all about. I watched friends complete Dave’s program and the results on their life were so amazing I had to go pick up the book. I am in baby step 2 of the Total Money Makeover and it is positively affecting my life, from friendships to work success and especially my marriage. I will be debt free except the house in the next year and it’s hard to express the emotions all the small victories have done for us.

    There is no question Suze is a financial genius. I think Dave’s appeal is he has been there with us, he truly knows what it’s like to unplug the phone to escape the wolves long enough to sleep. He inspires us to admit we are sick and tired of being sick and tired, and that anyone can become financially healthy and change their family tree.

    Thank You Dave!

  41. Anon Says:
    September 26th, 2007 at 7:46 pm

    Dave’s plan is not designed to pay off debt the fastest. It is designed to pay off debt with the lowest failure rate — I would argue that you cannot fail once started.

    When you payoff the debt with the lowest balances first, you are immediately decreasing risk, and also increasing you monthly cash flow. When I say: risk, I mean the risk of becoming financially ruined (or at least dug into a deeper hole) when unexpected life events happen.

    I don’t know about you, but decreasing risk by increasing cash flow makes me sleep better at night. Here is my personal experiences:

    $2,500 Student Loan at $250 monthly payments (4% interest)
    $6,000 CapitalOne CC at $100 minimum payments (5% interest)
    $16,000 Car Loan at $367 monthly payments (%7.8 interest)

    I listed the values in the order that Dave Ramsey says to pay them off — NOTE: to pay these balances off in the quickest way (mathematically), you would pay them off in reverse order.

    After knocking out the student loan in the first few months, I permanently removed a bill from my life. Guess what happened next:
    $440 for a new water heater
    $150 car brake job

    Instead of having to charge these “Murphy’s Law” expenses onto the Credit Card, I was able to easily pay these expenses in Cash because of the extra cashflow gained from paying off the student loan. Instead of these two issues being a major financial issue for me, they were trivial.

    Had I been paying extra on the Car (the loan with the highest interest rate), I would have been forced to charge these “unexpected” things onto the CC, and going further into the rat hole of debt.

    In a nutshell, the Dave Ramsey system is designed to reduce risk, and increase cash flow, so that you will not have to use more debt to pay for unexpected events. And since you will no longer be forced to use credit (like in my case), I assured a better success rate at actually getting out of debt.

  42. r1sean Says:
    October 2nd, 2007 at 10:01 pm

    Well said, Anon and Felix. I don’t know about you all, but I’m doing ‘better than I deserve’ these days! My wife and I have been on Dave’s plan for 4 months now. We have an emergency fund in place, and we’re killing debt like crazy! The psychological reward behind ‘knocking out’ debt from smallest to largest one at a time is unexplainable. It leaves you with a sense of accomplishment and gives you the strength to continue with ‘gazelle intensity’ (inside joke).

  43. Sandra Says:
    November 11th, 2007 at 12:42 pm

    I like Dave Ramsey’s method better. The first thing he will tell someone is to not even get a CC. I have never owned a credit card because I have to be patient when purchasing things. Perhaps for those that disagree with Dave’s method should have not acquired CC debt to begin with. As shocking as it may seem, life is managable without a CC.

  44. Eighth-1der Says:
    November 15th, 2007 at 11:43 am

    We are Pavlovian creatures and respond to rewards. The sooner we get our first prize the easier it is to wait for the second prize.

    While the Orman method makes mathematical sense, this comparison leaves out the LOGICAL analysis that most people are in debt because they “did the math.”

    The other important step that has been left out of this comparison is Dave Ramsey’s “Baby Step Number 1: Establish a $1000 emergency fund.” There are few things in life that can’t be fixed for a few months with a grand. Orman’s method makes no such allowance for “Murphy’s Law” and as such leaves the door open for a trivial accident to derail the entire plan.

    Paying absolute minimums on revolving debt is the best course of action because the minimum does reduce the balance (since the new laws). Meanwhile that Home Depot card with the new fridge gets paid off in 2 months ($450/mo) Even though is was promotionally financed at 12 months same-as-cash. Now the alignment, shocks and four new tires at Firestone that had a min pmt of $65 can be attacked with the $450 plus the $65 ($515 for those without a calculator).

    In 2 more months you send the $515 plus the $42 min payment you were making to Capital One or Bank of American or Chase or Discover. In five months that $2300 is gone. Discover calls you up and offers you 4.9% for two years to give them some business; so, you transfer $4800 from that Chase card at 21.94% (savings of $56/mo in interest). And you make $559 payments. In ten months you have a zero balance on Discover.

    For those of you keeping score that was 19 months to pay off four CC’s with a total balance of $9000. The additional interest accrued cost another $1000. With no change of lifestyle! Imagine selling some stuff you have in that storage unit and stop paying $65/month to keep stuff you can’t remember you have. Sell the two TVs and the old fridge (do you really need extra beer storage?) Turn down the heat 2 degrees, turn off some lights, and eat hamburger helper and save another $50/month.

    The Orman plan for this same scenario takes 17 months and incurs $850 in interest.

    Why work the Dave plan? As previously mention the psychological advantage to actually PAYING OFFFFF a debt is the encouragment to stay on course. We are Pavlovian creatures and respond to rewards. If we get our first reward after only two months of struggle, the next two months fly past.

    Waiting for rewards is something American consumerism has erased in our minds. That’s why we had to have that new fridge purchased on a credit card. Next time we will have $1000 in the bank and will budget a little savings for a new set of tires (next fall because these ones are wearing out).

    The CPA that does my taxes is a brilliant financial mind. But I have a house that is 78 percent paid for, a 6-year-old paid-for truck and a fourteen-year-old econo-car, and my year end bonus will erase my last CC. Meanwhile my CPA has a house he can’t afford (his words); he drives a new 5-series BMW that he leased and can’t afford the mileage overages (his words); and he has a brand new kitchen (on a HELOC).

    Go ask someone who lived through the Great Depression how to get out of debt. Don’t ask a CPA with a asset to liability ratio of 0.7 to 1.

  45. Weekly Roundup #11 (January 5, 2008) - My Investing Blog Says:
    January 5th, 2008 at 7:00 am

    […] 3. I’ve like PaidTwices “Snowflake Revolution” for a while, I’ve read about it before and it is similar to Dave Ramsey’s snowballing; but revolutionized! […]

  46. Frank J Shipkowski Says:
    January 6th, 2008 at 9:33 pm

    I’ll give it a try

  47. Just Me Says:
    January 24th, 2008 at 3:55 pm

    I am more familiar with Dave than Suze. I listen to him on the radio everyday at work. He keeps me motivated. I really don’t think it matters which plan you choose as long as you stick to it. That’s the key. Just pick one and stick to it.

  48. rich Says:
    February 18th, 2008 at 10:39 am

    Assuming you have the same discipline in both techniques, Suze’s technique is much better assuming that there is some variation in interest rates.

    The problem is the average person really isn’t very disciplined. example: I’ve ALWAYS paid off my credit cards every month, but I have a buddy who had the discipline to get an BS and MS in engineering as well as an MBA but swore by his American Express card because of the forced discipline.

    This suggests that for the average person, the additional motivation provided by the Snowball technique will probably work better.

  49. kentuckyliz Says:
    February 24th, 2008 at 11:52 am

    I like how Dave Ramsey fires up people (including me) to get out of debt. Hate debt, hate debting, hate payments. Just quit being so NUMB to the debt load.

    I had to wake up and smell the plastic. I finally paid off the credit cards and it’s great. I just have a little bit of student loan left and then I can yell


  50. Malcolm Says:
    February 28th, 2008 at 12:33 pm

    Telling someone not to even get a credit card is a ridiculous comment. First, credit cards help you establish credit (it is NOT a BAD thing per se). Secondly, have you ever tried renting a car without a credit card? Probably not.

  51. Bethany Says:
    March 3rd, 2008 at 1:52 pm

    Malcolm – I sure have. I used my debit card and rented from Enterprise for 3+weeks after a car accident. NO problem. I haven’t used credit cards in over three years. I’m NOT debt free, yet – still have the two car payments and loan my in-laws made to hubby when he was 18…but breaking the pattern of I-want-it-I-must-have-it-now-and-make-payments-for-it-later means we can afford to lose my income after our baby is born…THAT is priceless.

    As for my credit score, I got a great apartment with a lower rent than the big complexes offered…the guy didn’t even RUN my application before telling me the unit was ours if we wanted it. I spoke directly to the owner; asked how he evaluated his tenants, was frank about having been in a mess, blunt about never going back there again. I pay early every month and will have a great reference when it’s time to consider a mortgage.
    I listen to DR, but guess what? My decision about getting out the hole was made years before I ever heard of him…so was getting rid of the cards and, here’s a shocker, not buying something if I couldn’t afford it.
    DR’s plan is (un)common sense. The debt snowball is only one part of it. I suspect for someone who has the discipline to fight through, inserting SO’s plan into Step 2 of the DR plan would yield a similar result. The key is the discipline. And that discipline and drive is easier to maintain when you see results…one less phone call from a creditor…one less bill in the mail…one less thing to worry about each month. The relief is indescribable.

    I don’t miss my credit cards one little bit. Nothing that I ever put on any of them is part of my life now.

  52. Raul Says:
    March 8th, 2008 at 10:06 pm

    I have to tell you that I follow BOTH Dave Ramsey and Suze Orwman.

    I am very grateful for Dave where on his website I saw in plain math that I was overspending about $700 per month. I thought there was nothing I could do. I felt very discouraged. I watched on Sunday morning (from the Saturday night CNBC) Suze Orman show and she provided some encouragement from her talks to viewers. I could also hear Dave scold me for making dumb moves – I don’t think it was bad to hear Dave’s comments , in fact it’s something I needed to hear. I tell you, between the two of them, I cut down my expenses (got rid of two cleaning service, car washes, gym service, extensive vacations), sold two cars I couldn’t afford, and by this September, will be out of debt. I’m amazed. This was the first year thanks to Dave that I followed my budget, had enough to pay the property taxes, car, flood and homeowner’s insurance in cash (so strange to pay it in full). Thanks to Suze, my FICO score has gone up… and it has never been so high…refinanced the home at 5.25% no points fixed, get credit card offers of 0% (which I’m not taking). The next step is cutting them all off (but for me.. want to wait until I have six to eight months of emergency fund. Then…I plan to considering the emergency fund as an inverse credit card…where if I use it, I have to pay it back.

    In a nutshell, I’m grateful to both Dave Ramsey and Suze Orman!!

  53. Rochelle Says:
    July 21st, 2008 at 1:04 pm

    The same philosophies could be applied to a hypothetical weight loss scenario:

    If you were a 5’6″ individual who weighed 250#, under which set of circumstances would you be motivated to continue working out at the gym?

    1) You go to the gym 3 times a week to work out. At the end of six months you lose 50 pounds instantaneously. (Suze)

    2) You go to the gym, and by the end of the second session, you weigh yourself and find you’ve lost one pound. By the end of the next week, you’ve lost 3 pounds all together, etc. (Dave)

    Which is going to keep a person going? A goal that’s painful, long, and seems unattainable, or the one that shows small but quicker results?

    Just like being skinny seems a difficult/impossible goal to the obese, being out of debt seems like an impossible possible goal to those used to living through debt. Small victories are proof that the plan a person is on is working. Without the quicker results that show the plan is working, there is no motivation to make difficult personal sacrifices and try to conquer the impossible.

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  56. Jack Says:
    September 4th, 2008 at 10:08 am

    I was in this ‘bad place’ years before Dave or Sue were in the public eye. I had the good luck to have a CPA who admitted to me, it was much easier to ‘do as I say, not as I do’. Anyway, I took his ‘do as I say’ advice. It was similar to Daves, but took into account interest rates (think Jimmy Carter years with 18+% interest on bank loans, and credit cards that looked like loan shark rates).

    The first major sin in economics is to run out of cash. So, get on the positive side of a cash flow curve. If the ‘easiest’ is to pay off a couple of ‘small debts’, then do it. Then attack highest interest rate ones first, with the positive cash flow. Just because you have cash or you have debt, doesn’t mean you can spend on anything except ‘necessities’, you still cannot spend on ‘wants’.

    Necessities include,
    1) all payments current
    2) a short term cash buffer ($1,000)
    3) pay off credit cards, in the order of
    a. highest $ payment / $ total to be paid
    re-evaluate after any pay raise or
    a credit card is paid off.
    This raises cash flow fastest
    (Dave’s style).
    b. highest interest rate first (Sue’s style)
    4) when payments are under 30% of your gross,
    set aside more money to go with the $1,000
    cash buffer, and fund it until you have
    6 months of living expenses. Keep this in
    an interest bearing savings account. Not to
    easy to get to, but there if you need it.
    5) Once credit cards are paid off, and you are
    have 6 months of buffer, start (1) give away
    10% of your income, save 20% (roth IRA is
    great, but anything helps! this is LONG
    TERM savings), live on the rest (70%).

    If you have an emergency you CAN spend the
    ’emergency fund’, but you MUST replace it
    starting NOW, as fast as possible from regular
    cash flow.

    That does not mean just spend it. From that
    SAVE for short and medium term expenses.
    Like, cars, insurance premiums (don’t pay the
    ‘service charges’ that allow monthly payments)
    buying school clothes, etc.

    DO NOT use a credit card as an emergency fund.
    You can use a credit card, but pay it off

    Yes, some months are hard and it would be easier
    to ‘just bend’ the rules. But that is just being
    tempted to fall back into ‘old habits’ that are VERY hard to brake.

    Have I had debt since then? Yes, a house, but we did pay our last one off, and it was a relief to have it paid off!

    I also got a loan on a car, at a high interest rate once. But as soon as I could arrange to get money from a savings account (it was in another state and took almost a month, with all the checks needing to clear … many years ago), I paid it off in full before the second payment was due. The dealer called me up and told me I cost him money, because the kickback that dealers get on loans have some contingencies built into their agreements that make them take some financial risk in case the loan is paid off to soon. I informed them that I lived up to the terms of the agreement I signed, and that if they had an issue, they could take it up with the loan company they contracted with. I wasn’t popular with them, but I got the car on the terms I wanted within all legal and ethical means.

    Anyway, you can get out of debt. No one method will be optimum for everyone. But any of these work. Start one, and start it now.

    Sue’s may be mathematically more correct, Dave’s gives more psychological feedback sooner. My combination worked. Just do one. ANY one, but do it!

    Oh, how to my finances work when I liked it the best? Give 15%, save long term 15%, save for medium/short term $10%, blow 5%, now save and live on the rest for daily expenses. I have tried this before and after taxes, either way, it works. If you do it before taxes, you need to put a 30%+ factor for taxes in there.

    I have friends with businesses, and they ‘tithe’ their business. Most have been blessed. This means after considering, income, expenses, including overheads, they give 10% before they consider they are making a profit.

    To give, I prefer religious organizations, but if you are not a believer, give anyway. Give more to one place rather than $5 to whomever asks. I would suggest any of: Habitat for Humanity, Heifer International, Angel Food Ministries, Red Cross or Red Crescent (, your local PBS TV station, a local homeless family shelter, or to a college that your and your family did not attend,, and go get involved with the organization.

    Jesus taught, and it seems to be true even in non-religious arenas, that giving helps the giver more that the receiver if the gifts are given in the right frame of mind. Giving helps us keep in mind that money is a tool, and important tool, but only a tool to help make life worth living.

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  58. ISA savings Says:
    September 19th, 2008 at 1:55 pm

    Perhaps list all debts under 10-20% of your total debt.
    Line those up in Interest rate order and pay them..
    Then line up the remaining debts and pay them off in interest rate order.
    Quick wins/low hanging fruit for morale – but then reinforcing the pay off the highest interest rate line

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  60. jane Says:
    November 4th, 2008 at 11:45 pm

    Personally, I use the which one has the highest monthly payment method. If I can eliminate a $500 monthly car payment, then I can certainly apply that $500 monthly towards other debt. And they all seem so small after that.

  61. Rick Says:
    January 19th, 2009 at 12:14 pm

    For all the math geeks:

    If interest rate is such an important consideration when paying off debt, then why did you borrow money at a high interest rate in the first place?

  62. Thats Right Ricj Says:
    February 10th, 2009 at 6:21 pm

    I am glad to see a lot of comments on this topic. Dave Ramsey’s way isn’t about math as far as adding interest over time. But Killing the lowest debt first with all your might and keeping that ball rolling. If you ever been to a FPU class you know that most people are in some tight spots and are not there to learn math. IT is very emotional and that is the biggest driver. Debt Free For Life!

  63. wunderwriter Says:
    February 25th, 2009 at 4:43 pm

    I would just like to say that, as a person who has tried to “outsmart” debt by moving it around, and then by paying the highest interest rate debt first, and failing miserably, I am now firmly aboard the Dave Ramsey plan. What I LOVE about paying the smallest debts first is that, regardless of the interest rate, it’s one less bill each month, one less due date, one less minimum payment, basically one less hassle. It may cost a bit more interest in the end, and when I’m finally down to the last two or three of the largest debts I will most likely switch to the one with the highest rate rather than the one with the lowest balance because they are about the same balances, in the meantime I’m enjoying looking forward to opening one less bill every month where something is finally paid off in full…and we haven’t used the credit cards since starting the program, something I wasn’t able to do previously for any length of time because “emergencies” kept coming up. We’ll be on step #2 for four more years…but at least we’re making progress and not going backwards. Paying the smallest debts first works best for us.

  64. kwyjibo Says:
    March 5th, 2009 at 4:26 am

    What most of you anti-Dave posters are not understanding is that Dave DOES tell you to get your cards down to lower interest rates to save you $$. He doesn’t want you to keep them at high rates throughout the snowball.

    But paying down the lowest balance is the absolute BEST way to do it. If you pay the highest interest rate, you could be paying it for several months/years and ALL of your other bills will still be sitting there every month.

    By paying down your lowest balances, you may have several of them knocked out within just a few months, therefore leaving you with just one or two bills to pay off. How awesome is that?! That in itself is a huge win and will keep you on the path to freedom.

    And, by the way, those of you on here that are justifying keeping your credit cards around ‘just in case’, that is BAD news. You don’t need them. If you walk with a plastic crutch, you will always limp financially.

    And one more thing…

    You only need a credit score to go in to debt.

  65. FLNonny Says:
    April 20th, 2009 at 8:11 am

    Some of you don’t get it. Since getting out of debt is 80% psychological and just 20% head knowledge, paying off the debt with the highest interest rate will take MUCH longer and most people will tire and quit because they don’t see results quickly. By paying off the smallest debt and then using that money to pay off the next smallest debt (and so on), there is instant reward. You see the plan working almost immediately! THAT boost to a person’s psyche will keep them working to get debt free. I am a volunteer facilitator for Financial Peace University. My husband and I paid off $18,000 in debt in just one year. On a $94,000 income we have just our $824 house pmt. When I begin teaching in the fall we can add another $36,000 to our income. We don’t use credit. We use our Visa Debit card all the time. We drive older cars and we choose not to be house poor. We are able to donate to all the causes we love, help family and friends, and NOT worry about being broke or opening that dang mailbox to find it filled with bills(as we once did). Dave’s program has proven success. Start by reading his books at the library. Then consider paying the $100 for his classes; they are WELL WORTH IT if you are truly serious about taking responsiblity and getting yourself out of debt. Good luck to you.

  66. Phillip Foster Says:
    April 25th, 2009 at 6:38 pm

    Dave Ramsey does admit, though in passing, in Financial Peace University, that, yes, indeed, paying more on the credit card with the highest interest rate does make more mathematical sense, but, yes, he attaches great emotional value to paying off a credit card, completely, and that is likely going to occur by paying off the lowest credit card balance, first.

    Either way, in terms of pay-off time, the difference is not that great, in my experience. So… even though I have the mathematical background, myself, I am learning to appreciate the emotional benefits of the Dave Ramsey Debt Snowball philosophy!

    Phillip S Foster CPA
    Dave Ramsey Endorsed Local Provider

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  68. Charles C. Says:
    August 1st, 2009 at 10:17 pm

    Getting deep in debt is not just for “irresponsible” people. I’m really tired of hearing that from people who have been lucky to avoid disasters in the last few years. To those people.. try living in hurricane country, having serious family medical problems, skyrocketing medical and insurance costs (that literally mean life-or-death) and major reduction of income at work.

    After years of trying to pay down credit cards, them having to use them again in real emergencies, if finally occurred to me that we were looking at the wrong priorities. Unless you close a card, it will be extremely hard to pay down during a period of reduced income.

    So we switched to paying only CC minimums, and instead pay extra only on our physical assets, via Snowball method.

    Every payment on a car note, house note, etc., -permanently- rids us of principal on a debt that cannot not reappear through any future borrowing (like CCs).

    And, should we lose all of our income and have to declare bankruptcy, etc., at least we will not lose our home and automobiles. For that matter, after paying off a physical asset, you then own 100% of a physical asset that you can later sell . Or, perhaps even borrow against at a lower rate to pay other high-interest notes. Once we safely OWN all of our physical assets, we’ll switch back to paying down the credit cards.

    Since switching a year ago, we’ve paid off a car note, our primary mortgage, and some farm equipment loans. That has freed up a lot of money to finish our remaining notes, plus the satisfaction of outright owning our major assets.

    Many of the strategies posted above are clearly “pencil exercises” written by fairly well-off people who have never personally experienced danger of losing everything they own!

  69. Brenda Says:
    September 23rd, 2009 at 4:44 pm

    I am doing Dave’s plan I really am onboard with it. If you are a math nerd and are worried about the interest you would have never used a credit card to began with. you were wanting something that you could not afford at that time. instead of saving up for it, and paying cash for it.

  70. Josh Says:
    December 25th, 2009 at 11:00 pm

    Dave’s plan is more than what you said. It also includes a zeroed out budget, which you pay any money extra that you have onto your debt. Suze’s won’t work if you cannot afford 10 dollars more on each. Dave’s will as you end up paying more than the 10 eventually, but you only pay as much as you can…

  71. Vicki Says:
    March 14th, 2010 at 4:55 am

    what ever you can do to keep your credit in good standing

  72. Anti-Ramsey Says:
    April 13th, 2010 at 5:27 pm

    Orman’s advice is as dumb as Ramsey’s, as both of them lack any basic knowledge of mathematics.

    PAY OFF THE HIGHEST INTEREST FIRST. That’s the only correct advice, no matter what those uneducated “financial gurus” tell you.

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  76. Lvnv Funding Says:
    December 6th, 2010 at 11:42 pm

    I appreciate the debt snowball tactic, specifically exactly how Dave suggests accomplishing it. If you happen to be instructing the world like Ramsay, something everyone is deficient in is definitely drive. The majority of people must be enthusiastic to keep proceeding, therefore start with the tiniest personal debt and pay it off first.

  77. Joshua Says:
    December 29th, 2010 at 5:07 am

    I think this issue is 99% emotional, and 1% rational. People get into serious CC debt not because they are making rational financial decisions, but rather making emotional financial decisions. I think the roll up method is completly appropriate in this case because people struggling to pay off CC debt need all the emtional motivators they can get.

  78. Daniel Says:
    March 15th, 2011 at 12:02 pm

    I sat down one night and did hardcore math looking at every possible scenario to determine the fastest and cheapest way to pay off my debts. Here is what I found:

    (background information – I have about $106,000 in debt from 25 different accounts – student loans, cars, and credit cards for both me and my wife)

    The snowball method would put me out of debt the fastest and would save me the most in interest (by a couple thousand dollars) if my monthly payments were minimum to minimum +$200

    Paying off the highest interest rate first would get me out of debt faster and cheaper only if my monthly payments were higher than minimum +$300

    Although it doesn’t make “sense” the math shows that the snowball method is indeed the fastest and cheapest way to pay off debt, but there is a threshold at which that no longer becomes true based on how much over the minimum you are able/willing to pay.

    Hope this helps.

  79. Mike Says:
    May 10th, 2011 at 11:32 am

    I go for Dave Ramsey. It’s a clear-cut way to live worry-free about money.
    I am currently on Step 6, myself.
    I’m blogging about how I plan to pay down my mortgage by age 30.
    Check it out if you want.
    I am living a happy life, and now a less materialistic one… thanks to Dave.