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So, I was blogging around (sounds minutely dirty) an stumbled across a great post. It comes from Scott’s 7 million in 7 years Blog, (here). Which discusses Snowballing versus Avalanching.
1) Ramsey’s Debt Snowball versus Adrian’s (scroll to bottom for About Adrian) mention of the Debt Avalanche.
Debt Snowball : Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.
Debt Avalanche: pay off your largest interest rate debts first, thereby giving you a faster ‘return’ on your debt payment and truly, mathematically paying off all your total debt the fastest.
I plan on researching the figures for Avalanching w/ the possibilities of revising my budget spreadsheet. I know most like the quick feedback from the paying the smaller debts first, but would you consider avalanching if it will pay off your total debt faster? Something much to consider because I know we all want to get out of debt, now! 🙂
mathematically it does make sense to pay the higher interest debts first but, emotionally (for some) it makes sense to pay the smaller debts first.
whatever works for you and whatever gets you doing SOMETHING…ANYTHING…y’know?
have a great weekend!
Wow – you will have to let me know what you think of it! That would be pretty cool to see for sure. I should look at that to see what it may do to my budget 😉
I had never heard of the specific avalanche plan; however, I believe Suze used to suggest paying off the high interest first (not sure if she still does). When I first made my plan, I plugged in the numbers and for me, it was a matter of a couple hundred dollars – if I paid according to schedule. Since my plan was to pay my debts faster than the conservative schedule I came up with, it didn’t really matter in the end. I do think what has really mattered to me is being able to PIF each credit card and fairly quickly. That has been tremendous motivation. If I was only on card 2 right now vs. card 5, I may have already gotten discouraged, just knowing my personality.
But, whatever works to get to PIF!
Hi there-I think it really is a personal approach too, depends on what you feel happiest acheiving-good luck!
That’s interesting approach. I think Suze does advocate high interest first. Let us know how it goes.
thx for the shout out!!! gotta love rhymin’ it up 😉
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