Comments on: Avalanche or Snowball?

By: * Dave Ramsey’s Debt Snowball

* Dave Ramsey’s Debt Snowball — Wed, 08 Apr 2009 02:05:49 +0000

[...] CommentaryTo Debt Snowball or Debt Avalanche, That Is The Question at Bible Money MattersAvalanche or Snowball? at How to Make 7 Million in 7 Years™Debt Avalanche? Correct? at Beating BrokeOther Debt Snowball [...]

By: Sandy

Sandy — Sat, 14 Mar 2009 23:27:12 +0000

My interest rates are pretty close to each other so I am pretty much snowflaking right now. Mind you when there were major differences in the the interest rates I was definitely avalanching. Paying more interest than I need to makes me physically ill now.

By: Debt snowballs, avalanches, meltdowns … « How to Make 7 Million in 7 Years™

Wed, 27 Aug 2008 12:03:58 +0000

[...] The Debt Avalanche, nicely described (and named!) here is mathematically the best way to deal with eliminating all debt. I also covered this method in a recent post. [...]

By: AJC

AJC — Wed, 06 Aug 2008 20:49:40 +0000

@ Lulugal – If you don’t intend to invest then I agree any method is pretty evenly matched … then again, if you’re not intending to invest, you wouldn’t be reading this particular ‘wealth-building’ blog, either

By: lulugal11

lulugal11 — Wed, 06 Aug 2008 13:54:36 +0000

When I learned about the snowball method I was told the snowball had two methods: you could EITHER pay the biggest amount first OR pay the biggest interest rate first.

So the ’snowball’ and the ‘avalanche’ are the same thing. In both of them you are paying the minimum on every debt…except for one debt that you target and pay more than the minimum.

By: moom

moom — Wed, 06 Aug 2008 02:38:54 +0000

Makes perfect sense. I don’t know why so many US PF bloggers want to pay off their cheap student loan or mortgage debt so fast.

By: totaltransformation

totaltransformation — Tue, 05 Aug 2008 13:00:06 +0000

Makes sense to me. I definitely prefer the avalanche method.

By: Jason Dragon

Jason Dragon — Tue, 05 Aug 2008 12:45:38 +0000

I look at it this way. I first pay the minimum on everything. I keep a specific amount of money to run my businesses, but all of that money has a cost of capital, if not a real cost but an opportunity cost. I then can figure out the cost of that capital. I don’t pay off any of the debt that is below that cost of capital, UNLESS it is money that I can access again if the business needs the capital. I figure that my current opportunity cost/cost of capital is well above 20%. My average debt is only 8% and all of it is below 20%, so I am in the phase where I ONLY pay the minimum to everything. I put the rest to investing in my business. I can buy $5000 in parts and turn it in to $6000 fairly easy and so it would be insane to take this money and use it to reduce debt. I do pay the 5000 on a card and use that card to buy the inventory. 2 years ago I had over 100k that I was investing in such a way and it was producing well over 15k per month, but through a string of theft, and market losses much was lost. I know now that protecting this money is more important than debt reduction.

Jason Dragon
http://blog.capitalactive.com/