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No..... he said he would tackle the debt. But he was out of work for three months.
You say why assume he'll lose his job?
Chances are that, no, he won't lose this new one any time soon.
But......that's one of the reasons people have an EF so IF they lose their job, the wolf isn't at the door the next week and they're not putting debt on credit cards -- and adding to the debt they're trying to get out of.
And that's how people get behind, NOT assuming something unexpected will happen.
And more and more things that happen cost more than 1K.
I'm sure there are plenty of people who'd trade being in debt but paying it down (with an EF in your pocket) in exchange for...... in debt, no EF and being one paycheck from not paying next month's or maybe even the rest of this month's bills.
But whatever.....I do what helps me sleep at night.
*simple minded* people benefit from his simple minded approach.
He loses me with his "pay off the lowest balance first" approach, which is mathematically incompetent.
Personal finance isn’t just about math, it’s about emotion and psychology.
Paying off the lowest balance first allows someone to get a quick win, and is wasn’t invented by Dave Ramsey.
It’s called the debt snowball method.
Quote:
If you think small victories will provide you with the motivation you need to pay off your debt, the debt snowball method could be just the ticket for eliminating your debt.
Instant gratification is how people get into debt. Instant gratification, via paying off the smallest balance first and getting a quick victory, is how people can get out of it too.
No..... he said he would tackle the debt. But he was out of work for three months.
You say why assume he'll lose his job?
Chances are that, no, he won't lose this new one any time soon.
But......that's one of the reasons people have an EF so IF they lose their job, the wolf isn't at the door the next week and they're not putting debt on credit cards -- and adding to the debt they're trying to get out of.
And that's how people get behind, NOT assuming something unexpected will happen.
And more and more things that happen cost more than 1K.
I'm sure there are plenty of people who'd trade being in debt but paying it down (with an EF in your pocket) in exchange for...... in debt, no EF and being one paycheck from not paying next month's or maybe even the rest of this month's bills.
But whatever.....I do what helps me sleep at night.
I missed that episode. Any idea what kind of debt this is? If it's 80K in credit debt then he needs to pay that down as fast as he can. Having 8K sitting in his checking account while interest is rapidly accruing on his credit card debt is not serving him well.
The minimum payments on those cards, alone, must be astronomical.
*simple minded* people benefit from his simple minded approach.
He loses me with his "pay off the lowest balance first" approach, which is mathematically incompetent.
As mentioned above likely scenarios and mathematically optimal aren’t always the same. Paying the lowest balance first is all about engagement, seeing progress sooner and sticking to the plan which overtime does produce better results than folks washing out and never seeing it through.
If you're uneducated enough to buy a timeshare in the first place, then OF COURSE you think that there's a magic and expensive way to just get out of it.
And, OF COURSE, if Dave endorses the method, then obviously this Magic and Expensive way works.
I used to drive a lot and would listen to him from time to time; his callers are consistently not very bright and very susceptible to being manipulated. He could tell them to lick pickles in the dark and they'd do it.
I missed that episode. Any idea what kind of debt this is? If it's 80K in credit debt then he needs to pay that down as fast as he can. Having 8K sitting in his checking account while interest is rapidly accruing on his credit card debt is not serving him well.
The minimum payments on those cards, alone, must be astronomical.
Does not matter between credit card, car loan, student loan debt. Most likely the credit card could have lowest balance but high interest rate.
So the idea is probably to pay the credit cards off first. A quick win to get small issues out of the way.
He usually does say to pay minimum payments & be current on all accounts. Then you don't have late fees or other charges building up.
On the car loan could be difficult to find cheap used Toyota that runs like a top instead of paying off $30k loan.
Does not matter between credit card, car loan, student loan debt. Most likely the credit card could have lowest balance but high interest rate.
So the idea is probably to pay the credit cards off first. A quick win to get small issues out of the way.
He usually does say to pay minimum payments & be current on all accounts. Then you don't have late fees or other charges building up.
On the car loan could be difficult to find cheap used Toyota that runs like a top instead of paying off $30k loan.
This isn't going to get better for him as long as he takes a half arsed approach. Sounds like the guy needs to move back home and live with his parents while he gets these loans paid off or he can share a place with a roommate or two to keep his expenses down.
My guess is this guy is not fresh out of college and that he's been living above his means for awhile. 80K doesn't just "suddenly" happen. That took some doing on his part and it's going to take some doing on his part to pay it back.
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