The wisest strategy would be to pay the highest interest debt first. Any additional dollars available should be applied to Card A while only paying the minimum payment on Card B. Once the highest interest debt is paid, use the entire $400 to pay on Card B until that debt repayment is completed. The bottom line is that by paying the highest interest rate debt first; less money is paid in interest resulting in more money in your pocket. That just so happens to be consistent with my objective to "fattening my pockets."
Well unbeknownst to me, there is a rather famous financial advisor, Dave Ramsey, who promotes a different approach. He recommends that a person pays the smallest debt balance first regardless of the interest rate. Since the smaller debts can be repaid faster, a sense of accomplishment is achieved each time a debt is paid in full. Ramsey believes that from a psychological perspective this increases the likelihood of sticking to the debt reduction plan.
Posting of the article provoked the following exchange:
Reader:
The article is assumes that someone with credit card debt will make a rational, logical, well thought out decision on how to tackle the credit card debt. If the person were this logical to begin with they would never have racked up the debt in the first place. Attacking smallest to largest is a much a psychological win as it is a financial win. By knocking out the small debts first the person in debt gets the much needed feeling of accomplishment and that eliminating debt is achievable.
So the author of the article is wrong and is mostly likely jealous of the "expert" Dave Ramsey.
My Response:
I am sure that Ramsey has worked with thousands of people in debt and has come to the conclusion that paying the smallest debt first may lead to more success. Attacking the highest interest debt will put more money in your pocket over the course of the debt reduction process.
I agree that a sense of accomplishment is very important in a debt reduction program. However, compounding mistakes is not necessarily the wisest approach.
Reader:
I agree with the math of attacking highest interest rate first. However the author of the article (which I've seen elsewhere a few times) doesn't acknowledge the psychological aspect of why the person ended up in debt, and the need to crawl before you can run. He ignores the hopelessness many people feel when approaching debt elimination, and the initial baby steps needed to begin the path of debt elimination. He takes a crack at an ultra simplistic method which has helped people at least get on the treadmill, work up a sweat, and eventually get to a point where they can run a mile without stopping. His approach suggests it's really simple to jump on the treadmill and knock out a 5 mile run, because if you start there in the long run you'll lose more weight (I jumped into a weight analogy, but you get my drift).
Download Tips
No doubt, information is the highway to greatness in life. In a bide to obtain such information one is forced to get it whenever it appears online. One is please and satisfy with the rate of such information transfer if it is very fast. But the reverse is case when the data transfer ( i.e. bits or bytes per second ) is very slow. One is bound to waste time to be used for other demanding issues on a slow data transfer. But you can get out of this mess and speed up the rate of data transfer of your computer by applying the tips in this article.
Change or upgrade your connection. Your internet service provider render service according to your subscription. There is a limit speed associated with each connection. So, go for subscription that meet up with your need. If you are using dial-up connection, make use of Broadband connection for faster speed output. The broadband has Direct Service Line ( DSL) or a cable connection to be chosen for maximum performance.
No comments:
Post a Comment