Author Flexo from Consumerism Commentary compares the advantages of his solid alternative to Dave Ramsey’s debt snowball, dubbed debt avalance, against Dave’s method.
As Dave’s method is geared towards paying the smallest debt first while Flexo’s method aims to pay the most expensive debt first, it seems pretty clear debt avalanche pays for itself.
The method in a nutshell:
Step 1. Order your debts from highest interest rate to lowest.
Step 2. Pay the minimum to all debts every month.
Step 3. To your debt with the highest interest, send all extra available cash.
Step 4. Repeat every month.
As for the advantage of one over the other, Flexo argues:
“The Debt Avalanche will also provide early success, but if you need special motivation to continue your monthly payments, consider this: By choosing the Debt Avalanche method, you will pay off your total debt faster, you will pay less interest, and you are mathematically efficient. [...]
If he [Dave Ramsey] were to ask his followers if they want to carry their debt longer and pay more interest throughout before offering the “debt snowball” method, they would choose the faster, cheaper, better option of the Debt Avalanche.
The Correct Way to Pay Off Personal Debt: The Debt Avalanche
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