What about memberships to intenet chat sites?

I mow theguru's lawn to get my free membership for a year. :lol:

No it isn't. i don't care what order you pay them off in, if you only have $100 a month extra to pay your debt off (and I know you're speaking hypothetically) you need to take a new approach and find a way to have more income.

 

The fact of the matter is, today's way of thinking that you will always be in debt is ridiculous.

 

I agree 100%. :thumb:

I owe my in-laws $1,000 at no interest.

I owe $3,000 on a 0% interest loan on my car.

I owe $5,000 on a 4% student loan.

I ower $12,000 on my 18% credit card.

 

I can afford to put $100 per month to one of those 3.

 

Tell me how his numbers work out. I don't see it. It defies logic.

 

In the short term your right, but assuming that you are already making payments on all these debts if you use his debt snowball approach over the long term to get out of debt I'd bet the interest rates don't make much difference.

 

Dave has a lot of good advice (mostly common sense) but I don't agree with everything that he says. Truth be told he would prefer that you pay cash for a house, althought that is the one thing that he won't scold caller for using credit to buy.

 

I don't really agree with his theory to forgo contributions to your 401k either but his logic is that you catch up on investing once you are debt free, so basically even being debt free won't increase your cash flow cause you then have to use all that money that you used to pay to service your debt to invest with.

How so?

 

You HAVE to attack the highest interest debt with as much as you can. Why pay the minimum on the 18% interest while paying any extra you have towards the lower cost debt?

 

What is the minimum payment on a credit card debt of $10k to $12k? $50? $100?

I owe my in-laws $1,000 at no interest.

I owe $3,000 on a 0% interest loan on my car.

I owe $5,000 on a 4% student loan.

I ower $12,000 on my 18% credit card.

 

I can afford to put $100 per month to one of those 3.

 

Tell me how his numbers work out. I don't see it. It defies logic.

 

First you have to be paying something to each one of these. Let's say it is $100 and you have an extra $100.

 

IN 5 months, you are going to have your in-laws paid off. You take that $200 along with the $100 on the car loan and you in 8-9 months you have it paid off. So in 13-14 months two of those are gone.

 

The student loan will have about $4000 left during that time and you are going to take the $300 you had been paying on the car loan add it to the $100 and in 10 months it is gone too. So in about two years you are down to only the credit card.

 

Now you are paying $500 a month towards the credit card. In about another 2 years, it will be gone.

 

Going your route, you would start WITH the credit card and paying ONLY $200 a month. That would take awhile to pay off a $12,000, 18% credit card.

In the short term your right, but assuming that you are already making payments on all these debts if you use his debt snowball approach over the long term to get out of debt I'd bet the interest rates don't make much difference.

 

Dave has a lot of good advice (mostly common sense) but I don't agree with everything that he says. Truth be told he would prefer that you pay cash for a house, althought that is the one thing that he won't scold caller for using credit to buy.

 

I don't really agree with his theory to forgo contributions to your 401k either but his logic is that you catch up on investing once you are debt free, so basically even being debt free won't increase your cash flow cause you then have to use all that money that you used to pay to service your debt to invest with.

:thumb:

 

If you're debt free in 2 years you will have much more cash flow to put into a 401k than you would ever have carrying debt for 5-10 years and paying things off slowly.

In the short term your right, but assuming that you are already making payments on all these debts if you use his debt snowball approach over the long term to get out of debt I'd bet the interest rates don't make much difference.

 

Dave has a lot of good advice (mostly common sense) but I don't agree with everything that he says. Truth be told he would prefer that you pay cash for a house, althought that is the one thing that he won't scold caller for using credit to buy.

 

I don't really agree with his theory to forgo contributions to your 401k either but his logic is that you catch up on investing once you are debt free, so basically even being debt free won't increase your cash flow cause you then have to use all that money that you used to pay to service your debt to invest with.

 

It makes sense. I say do what it takes to get the maximum free money match from your employer, but nothing else while you're in debt. Once you're debt free, the savings will hit the fan.

You HAVE to attack the highest interest debt with as much as you can. Why pay the minimum on the 18% interest while paying any extra you have towards the lower cost debt?

 

What is the minimum payment on a credit card debt of $10k to $12k? $50? $100?

Around 150, I had one.

You HAVE to attack the highest interest debt with as much as you can. Why pay the minimum on the 18% interest while paying any extra you have towards the lower cost debt?

 

What is the minimum payment on a credit card debt of $10k to $12k? $50? $100?

 

I think you're just argueing for the sake of argueing.

First you have to be paying something to each one of these. Let's say it is $100 and you have an extra $100.

 

IN 5 months, you are going to have your in-laws paid off. You take that $200 along with the $100 on the car loan and you in 8-9 months you have it paid off. So in 13-14 months two of those are gone.

 

The student loan will have about $4000 left during that time and you are going to take the $300 you had been paying on the car loan add it to the $100 and in 10 months it is gone too. So in about two years you are down to only the credit card.

 

Now you are paying $500 a month towards the credit card. In about another 2 years, it will be gone.

 

Going your route, you would start WITH the credit card and paying ONLY $200 a month. That would take awhile to pay off a $12,000, 18% credit card.

:thumb:

 

Paying the larger thing off 100 at a time you will never get rid of it. Pay the minimum, pay off everything else then kill that thing off in a year, if you have $500 extr a month you could have it paid off in 12 months.

I think you're just argueing for the sake of argueing.

 

He can afford to:argue:

I think you're just argueing for the sake of argueing.

Problem is people really think this way and that's what the CC bank on, and that's why people never get out of debt.

Problem is people really think this way and that's what the CC bank on, and that's why people never get out of debt.

 

I know. Everyone needs a Nike approach to paying off debt "Just do it!"

Problem is people really think this way and that's what the CC bank on, and that's why people never get out of debt.

 

:thumb:

Funny thing is, if this really worked and everyone did it, the country would be in economic ruin.