Saturday, May 07, 2005

When the Numbers Are Less Important

There's a great post over at the Wealthy Blogger that I'd like to comment on:

Wealthy Blogger: Ultimate Credit-Card Repayment Plan

Just what I love to see: Numbers and charts!

Something I'd like to add, though. There CAN be a reason for paying off debts in an order different than highest- to lowest-interest rate:


I would vigorously contend that debt repayment is not purely about money. It is also about hope, emotion, and desire. If you're the sort of person who needs to see bills/payments disappearing in order to stay motivated and keep going (and there are lots of these folks around), then paying debts by smallest- to largest-balance can make perfect sense. Personally, I didn't pay my debts in this manner. But I can see where it could keep someone working thru their repayment plan consistently, rather than giving up early on because they don't see any progress being made.

Does this seem logical in the strictest financial sense? No. But human beings don't always act logically, either. If they did, there wouldn't be 20+% revolving balances out there, right?

If paying off your debts in some manner other than highest- to lowest-rate works for you — keeps you going when you might otherwise have given up — then that was the right plan for you, IMHO.

— Posted by Michael @ 10:52 AM

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]