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Author: LaraAmber Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308882  
Subject: Re: Rant: Money books Date: 7/21/2006 1:53 PM
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Regarding the wrong information: The method proposed by the author for paying off credit card debt is to line up your cards in the order that you will be able to pay them off by making only the minimum payments. Essentially, that means line them up from low balance to high balance. Then apply your snowball (he doesn't call it a snowball, but that's what he meant) to the CC that you can pay off in the shortest period of time. He makes absolutely no reference to interest rates. By following his method, a person in deep credit card debt would apply their snowball to a CC with a $5,000 balance at 0%, while letting a 20,000 balance at 30% sit there and get paid only the minimum. It literally made me mad that he didn't give out the best information possible.

I wouldn't call this wrong information, but an alternate method that has been proposed by several different financial advisors, including Dave Ramsey. The thinking is for some people, the sense of accomplishment is more important than saving a few hundred dollars on interest. Getting a few small debts out of the way and being able to stamp "paid" on them gives them enough of a rush/positive emotion that they can keep going, even though they are sacrificing like crazy to kill their debt.

I agree with this method for small debts, and money you owe friends, relatives, and coworkers. Paying your brother back that interest free $200 you owe him first so you don't have to feel guilty every time you see him is worth it.

Lara Amber
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