re: Another Dave Ramsey Thread

quote:

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Ramsey says to start with the smallest debt, and work your way up. I assure you, none of the above mentioned is our smallest debt.

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The debt snowball works because of psychology - you start to get small wins, and they add up. Plus, paying the minimum on everything is, effectively, financial slavery (or a super slow motion Chapter 13, followed by a Chapter 7 if something happens).

Arrange them from the smallest to the largest - if there are 2 within 4 or 5 percent of each other, and the slightly larger balance is at a much higher percentage, it makes sense to alter the order then, but otherwise, smallest to biggest.

It really is the most powerful part of this (other than the budgeting, which people obviously weren't doing to get into 2x, 3x, 4x their annual salary in consumer debt.)