The Money Mustache Community
General Discussion => Share Your Badassity => Topic started by: badassCraig on October 13, 2018, 10:04:01 PM
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If you Google "Dave Ramsey Debt Snowball", you can find a simple method for paying off debt and generate incredible momentum towards financial independence.
My wife and I did this last year, and paid down about $15,000 in debt rather quickly without making a ton of money. It frees up about $400/mo in expenses, which we have since put towards paying down our mortgage.
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If you download the calculator linked in http://forum.mrmoneymustache.com/ask-a-mustachian/which-loan-to-pay-extra-first/msg1307278/#msg1307278 and enter your loans, you can see how much difference it makes among various pay-off strategies.
Some people with enjoy paying the smallest debts first. Others will enjoy saving the most money by paying the largest interest debts first.
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Great job!!!
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Nice!
This thread is moving a bit slow, but there's a lot of people who will say that this strategy is stupid because you should always pay off the highest interest rate first. But I get tired of that. I paid my student loans off using the debt snowball, and it was always super encouraging each time I paid a loan off, working my way from smallest to largest. Any small-ish "loss" I incurred doing this was well worth the dopamine "hit" of eliminating one more loan and watching my monthly decrease. It was very tangible, worked for me :)
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I think Dave is the go to guy for overall advice on debt and I think too many people dismiss the "snowball" method as it technically takes longer and more money to get out of debt... But research shows the method works really well as compared to other methods. Just be sure to bask elsewhere before choosing to listen to his investing advice ;)
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I think Dave is the go to guy for overall advice on debt and I think too many people dismiss the "snowball" method as it technically takes longer and more money to get out of debt... But research shows the method works really well as compared to other methods. Just be sure to bask elsewhere before choosing to listen to his investing advice ;)
As with all endeavours, it is not always the optimal strategy that is the most effective strategy.
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Congratulations! I paid off mine a few years ago using a snowflake/avalanche combination. It's a great feeling!
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Its like weightloss. Whatever works and keeps you from putting debt back on!
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Great: Putting extra money towards debt randomly.
Greater: Applying money using snowball. Especially good for those who need "attaboys" to stick with it. Getting rid of a debt becomes the "attaboy" needed to keep from giving up.
Best: Avalanche method to getting rid of debt. Works well for math geared people (physicists, engineers, scientists) who likely will compute the difference between avalanche and snowball to the penny and see that it's the best way to go because......well.....math.
Note: I'm an engineer and from the day I graduated college, I used avalanche, not knowing there was a name for the method (probably wasn't back in the 80's). All debts disappeared. Along the way, no cost mortgage refis were done, a car was refinanced to reduce the rate (this was when car loans were 20% but rates were dropping) and as the next pay check was about to hit, we knew exactly how much spare money we had and would apply it to debt. Plenty of $5.21 type payments were made to inch our way to debt freedom.
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Bravo! Alot of MMM advice, as well as Dave Ramsey, is really to help one break their thinking and behavior patterns, and recognize there is another way. They both get you on a better path. Much of what we do is on autopilot, basically habit. If we can become more conscious with consumption, spending, debt, investment, and all matters of finance, and change our habits, this stuff becomes easier and easier as we go along. Great job getting on and staying on task with this.
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bumping this - great Excel spreadsheet