MInTheGap

Standing in the Gap in a Society that's Warring with God.

Don’t Consolidate Your Debt, Unless…

April 9th, 2007 Viewed 4291 times

Debt and DemandThe technique that Dave Ramsey uses to coach people to get out of debt is called the Debt Snowball.

The reason that it’s called a snowball is because of the basic premise: that you have an amount of cash that you can spend to get rid of debt and as you pay one off, more can go to the next one. You pay minimums on all but one, and focus the extra on one until it’s gone. Then, you roll that amount onto the next (with the minimum you were paying) until that’s gone. Keep repeating until you’re out of debt.

There are two different kinds of Snowballs:

1. Pay the Highest Interest Rate Account First

This debt snowball algorithm tells you to list all of your debts by highest interest rate to lowest interest and pay off the one with the highest interest first. When that’s gone, move to the one with the next highest interest rate until it’s all gone.

2. Pay the One With the Lowest Balance First

MInTheGap

Standing in the Gap in a Society that's Warring with God.