I’m a fan of Dave Ramsey’s debt payment approach called the debt snowball. The approach is simple. Pay off your smallest debt first. Then once that debt is paid off, move to your next smallest debt. Mathematically, I agree the debt snowball approach often does not work in your favor. Paying off your highest interest rate first will ultimately save you more in interest payments. But Dave Ramsey’s debt snowball is all about momentum and psychology.
"The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior. You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.”Do you agree with the debt snowball approach? What approach do you prefer to pay off debt?
- Dave Ramsey
1 comments:
I’m glad I’ve never been in the position where I struggle to make my debt payments, but I feel people should have knowledge of the different methods on at least a high level to determine what is best for them.
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