In a recent blog post, Dave Ramsey is criticized for recommending the snowball method – an approach to credit card debt reduction that entails paying off the credit card balances with the lowest amounts first, and thereafter paying off the cards with progressively higher balances. The “snowball versus other methods” debate is at the heart of our discussions on finances at DebtGoal. Too often this debate focuses on the seeming trichotomy between the three basic options: snowball, debt stacking, and constant payments. To be clear, the debt stacking approach is the best way of clearing credit card debt because it is the most mathematically-optimized strategy of the three. But choosing one of the three approaches against the other two does not kill one’s debt elimination efforts. What can kill it, however, is inaction or “falling off the wagon” with one’s actions and chosen strategy. In short, the snowball method is not the best way to eliminate debt, but it is definitely preferred to complete inaction.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
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