Thank you for the submission.

The results were very interesting because they varied depending on the balance and interest rates of each individual debt. Nevertheless there was one clear winner in my case and that was the High Interest First (HIF) method.

Here is a summary of the calculations:

Assumptions:

Total debt: $23674
Amount to pay each month:$3000
Total number of accounts: 7
Total time to pay off debt: 7.9 months.

Total Interest Paid
High Interest First $ (598.92)
Low Interest First $ (717.99)
High Balance First $ (710.60)
Low Balance First $ (607.58)
DOLP $ (670.79)

As you can see there is a quite a bit of variation in the interest paid, but the HIF method results in the most savings in this case.

In another calculation with different debt amounts and interest rates the HBF method tied for first with HIF with DOLP second, and in a third case it was second with DOLP fourth.

So given my limited analysis if I had to extrapolate I would recommend the HIF method, but really it depends on each person’s unique situation.

For step 2, Dave suggest paying off your debts smallest to largest, regardless of interest rates. Many people tackle the higher interest rates first, and while that is mathematically the best method, I still prefer Dave’s plan. With his method, you actually feel like you are getting traction and making progress. Each smaller debt that is paid off gives you a feeling of success and motivation. Who would want to tackle their largest debt first and have it take years to pay off? His method is simply best for motivation and keeping you on pace.

I do agree with you that dipping into your emergency fund to pay a debt was a bad idea and I even remember commenting about it at the time heh.

You make a good point about your citizen status and investing 15% into IRAs. As you said, only have them take out what is required for taxes and just keep the rest, as you could possibly lose it if you don’t remain in the states.

No kids means skipping baby step 5, yay!

You pretty much nailed the baby steps for the most part, but I think you are selling yourself short on step 6.

Anyone can pay off their house early and not make “buckets of cash”. The point of this step is not simply to avoid paying interest, its to avoid paying anything. By this point in your total money makeover, ALL of your other debt will have been paid off so you will have a lot of excess to throw at the house each month. Another part of this is not buying a house you can’t afford and putting at least 25% down for a down payment.

100% financing is a huge mistake as is a 30 year loan. If you have spent any time messing with a mortgage calculator, you already know that if you do a 30 year mortgage, you end up paying more than double for the house in the long run. NOT WORTH IT! Stick with a 15 year fixed rate if you must borrow for a home.

I’m not really a fan of taking the plan and totally overhauling it to “fit your needs”. People do this with religion all the time – only do what they think is right or follow things that is convenient for them. Rules and plans are meant to be followed, not changed to whatever you think is better. Just my opinion though

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The best thing to do is pick what works for you and go with it.

Despite our debt, we also contribute to the husband’s 401k (they match 75 cents on the dollar up to 6%) since it’s free money, and we also put a small amount into the kids 529 plan.

I’m not sure if working on a bunch of steps at once is best, but it works for us. I think that the Ramsey plan is excellent to help people become aware of their money, and is a great blueprint for some. I also think it’s ok to modify it to fit one’s individual needs though

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