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

By: Brenda

Brenda — Wed, 23 Sep 2009 21:44:08 +0000

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.

By: Charles C.

Charles C. — Sun, 02 Aug 2009 03:17:15 +0000

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!

By: Liz Pulliam Weston vs. Suze Orman - Who’s Right? | AllFinancialMatters

Fri, 01 May 2009 15:51:43 +0000

[...] away $50 per month. Then, I would either use Dave Ramsey’s or Suze Orman’s approach (which method’s better?) and put the other $50 per month towards getting out of [...]

By: Phillip Foster

Phillip Foster — Sun, 26 Apr 2009 00:38:36 +0000

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
http://www.phillipfostercpa.com/money.html

By: FLNonny

FLNonny — Mon, 20 Apr 2009 14:11:44 +0000

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.

By: kwyjibo

kwyjibo — Thu, 05 Mar 2009 10:26:58 +0000

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.

By: wunderwriter

wunderwriter — Wed, 25 Feb 2009 22:43:39 +0000

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.

By: Thats Right Ricj

Thats Right Ricj — Wed, 11 Feb 2009 00:21:26 +0000

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!

By: Rick

Rick — Mon, 19 Jan 2009 18:14:53 +0000

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?

By: jane

jane — Wed, 05 Nov 2008 04:45:55 +0000

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.