Following up on previous post: Avalanches & Snowballs
I forgot that I did this previously back in December, here. But, I included my student loans in the previous equation. In this newer calculation, I have excluded the student loans (locked at 3.25%). The reason behind that will be included in my next post.
Using the Debt Snowball Calculator
It will take me 32 months to pay off approx. $48,000 of debt
If I Avalanche:
Total Interest Paid $7066
By Ramsey’s snowball method:
I will pay $1,583 more in interest for a total of $8649
Of course, I need to assume that I will find other income streams to make this debt repayment go by faster. Thereby, saving a substantial amount of interest if I Avalanche.
I was looking at my spreadsheet and noticed that many of my high interest cards/loans have small balances on them (those pesky revolving store credit cards). So, it would be worthwhile for me to Avalanche, because I would still get the same satisfaction of Snowballing with the added bonus of interest saved.
Verdict: I am switching my spreadsheet to reflect paying down my debt with the highest interest first.
Happy Monday, fellow bloggers. ~ Money Funk
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As they say, personal finance is ultimately “personal”.
Ramsey’s snowball is great for people who are starting off on a debt reduction program. But once you become accustomed to the concept of accelerated debt payoff and you’re already disciplined enough to pay down debt without incurring new ones, I agree that the avalanche is the way to go.
But here’s another thing to consider – if you have a debt that has a variable interest rate with no cap (*cough* my private student loan *cough, cough*), that should get paid off first, regardless of interest rate.
that is so funny – your "quick f/u to avalanches & snowballs" I wasn't thinking 'follow up' either! haha
good luck! I look forward to seeing how it works for you 🙂
I don’t blame you Christine, do it the way that saves you money.
LOL! It took me a second to figure out the F/U too! Haha! Especially since I usually feel the other meaning towards my debts.
You have to do what’s best for you. Use the avalanche method for 6 months and see if you’re as motivated as you were with DR’s snowball. Evaluate your progress in 6 months and let us know how you’re doing.
@ shtinkykat: you’re right, it is personal. I’ve noticed my debt repayment journey to change many of times. lol. I am just glad that I can Avalanche with the same amound of satisfaction as the Snowball.
variable interest rate… I didn’t consider. love you *choking* remark. :)~
BTW, I think that a haircut is a well deserved expenditure. I see you carry the thick hair syndrome, too. It takes forever to dry!
@ jpkittie: tis your mind in the gutter!?!? LOL. I actually didn’t realize what you were talking about until I reread it later. lol! I use “f/u” at work all the time (medical). So, it didn’t dawn on me that it would be interpreted otherwise. :)~ My hubby got a good laugh from that one.
@ no more spending: I think with it being such a long journey that it doesn’t really matter if one Snowballs or Avalanches. Just as long as it works! But, I think if you are going to be aggressive in paying down debt…than Avalanching is the way to go. I’d like to calculate the interest saved as my journey goes on. And if I save more than the calculated.
@ Shawna: your mind is in the gutter, too? teasing. Sorry, I guess I took it as an assumption that everyone thinks like me. haha!
I have to admit there are many of times I think the other way in words with my debt, too. I will let you all know how the avalanching goes. 🙂