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Dave actually says pay off the smallest debt first no matter what the interest rate. He believes it gives you more motivation seeing debts disappear and you can actually see the traction.
I love it when a caller says it doesn't make sense to pay off a smaller interest rate before a higher rate, his response is "For years you've made every mistake in the book to get in the financial situation you find yourself in, and NOW you turn into a math major?"
Yeah, it's some psychological reason to make the person relatively enthusiastic about eliminating debt. I've never really agreed with that though because it isn't looking at it logically. I do get it... and it does make sense that say, if you have 10k on a credit card that's I dunno, 20% interest, and 1k on a credit card that's 10% interest... it might be compelling to pay off the 1k, I get it. But damn...
Anyway, any time I start getting crazy and spending more money than I'm taking in, I always re-read this story... it gets me motivated immediately:
Yeah, it's some psychological reason to make the person relatively enthusiastic about eliminating debt. I've never really agreed with that though because it isn't looking at it logically. I do get it... and it does make sense that say, if you have 10k on a credit card that's I dunno, 20% interest, and 1k on a credit card that's 10% interest... it might be compelling to pay off the 1k, I get it. But damn...
Anyway, any time I start getting crazy and spending more money than I'm taking in, I always re-read this story... it gets me motivated immediately:
I understand it. It’s like dieting. If it takes you six months to lose 5 pounds, you’re going to feel like giving up. However if you can start off losing five or 10 pounds in the first month, you’re going to be much more motivated to keep going and lose even more weight. You can see that what you are doing is successful so you want to keep going. It will result in making better changes to your life overall.
It is the same with the debt. When you see that you have paid off a credit card, it motivates you to keep going. You feel like you’re getting somewhere. Psychologically it is a big boon. And a lot of the reason that people get into these kind of debts are psychologically based. You really can’t separate the psychological from the financial for some people, and those are the people that Dave and Suzie’s advice is aimed for.
Dave actually says pay off the smallest debt first no matter what the interest rate.
He believes it gives you more motivation seeing debts disappear and you can actually see the traction.
I love it when a caller says it doesn't make sense to pay off a smaller interest rate before a higher rate, his response is "For years you've made every mistake in the book to get in the financial situation you find yourself in, and NOW you turn into a math major?"
Well, no, I majored in Physics, and, yeah, his idea to pay off the smallest debt for "feel good" "reasons" is mathematically incompetent. And that's just 8th grade arithmetic, really.
That is when I "turned him off". Well I don't have debt problems.
But for the pop psychologists who follow him, I guess he performs a service of sorts. He is right on most basics, probably the most basic is "spend less than you make".
But for the pop psychologists who follow him, I guess he performs a service of sorts. He is right on most basics, probably the most basic is "spend less than you make".
That nicely encapsulates my own complaint. We have pop psychology, pop financial planning, pop investment advice, pop fitness advice, pop housebuying advice, pop-this and pop-that. Want to increase the horsepower of your car? Pop advice. Want to really become lean and to build muscle? More pop advice. We're suffused with pop... pop culture, pop living.
Where does this leave a sincere and serious student? If I really want to daily-drive a car capable of 10-second quarter mile times, to whom do I appeal, for mentorship and knowledge? If I wish to become a sufficiently proficient weightlifter, as to be competitive in my city in my age-group, well, to whom would I appeal for training? If I wish to genuinely grow my investment portfolio, beyond canned portfolio-allocation advice at Vanguard, to whom do I appeal?
Pop-knowledge can be peddled by anyone, to anyone. But where do we find genuine knowledge?
That nicely encapsulates my own complaint. We have pop psychology, pop financial planning, pop investment advice, pop fitness advice, pop housebuying advice, pop-this and pop-that. Want to increase the horsepower of your car? Pop advice. Want to really become lean and to build muscle? More pop advice. We're suffused with pop... pop culture, pop living.
Where does this leave a sincere and serious student? If I really want to daily-drive a car capable of 10-second quarter mile times, to whom do I appeal, for mentorship and knowledge? If I wish to become a sufficiently proficient weightlifter, as to be competitive in my city in my age-group, well, to whom would I appeal for training? If I wish to genuinely grow my investment portfolio, beyond canned portfolio-allocation advice at Vanguard, to whom do I appeal?
Pop-knowledge can be peddled by anyone, to anyone. But where do we find genuine knowledge?
There are a myriad of shows for serious investors on CNBC, YouTube, etc etc. What you are complaining about is akin to complaining that a beginner’s ski class doesn’t cover techniques for expert skiers.
The people who call Dave are at the ends of their rope, drowning and depressed and they need that approach. I’m guessing you would resent those people for declaring bankruptcy and walking away from their debt, but you’re also begrudging that they have a source to teach them how to pay it off. A large part of that involves the psychology of why they got into the debt in the first place and how to get into an “I can do this” mindset.
Isn’t it good for everyone if these folks learn to manage their debt vs walking away from it? I don’t get the resentment here.
There are a myriad of shows for serious investors on CNBC, YouTube, etc etc. What you are complaining about is akin to complaining that a beginner’s ski class doesn’t cover techniques for expert skiers.
The people who call Dave are at the ends of their rope, drowning and depressed and they need that approach. I’m guessing you would resent those people for declaring bankruptcy and walking away from their debt, but you’re also begrudging that they have a source to teach them how to pay it off. A large part of that involves the psychology of why they got into the debt in the first place and how to get into an “I can do this” mindset.
Isn’t it good for everyone if these folks learn to manage their debt vs walking away from it? I don’t get the resentment here.
Agree - if you don't agree with his technique - don't use it.
I like talk radio, so I listen when his show is on. Can be interesting. The different situations the callers present.
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