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The Fastest way to pay off debt

August 24th, 2010 at 04:11 pm

OK. I know someone out there is going to try to disprove me. Right now I have about $67,000 of debt and spending about $2,200 a month on minimum payments. This includes one loan, two cars, and seventeen credit cards. Without paying anything extra I could pay off everything in thirty-one months. Everyone has heard of the snowball technique and others to help you get rid of debt. I have a different approach, and yes it involves math. Since there are so many variables with debt it makes them imposible to compare. The best way is to compare them on the same level. By taking the ammount you owe then dividing it by your minimum payment then again by the interest rate. This gives you a number and the lowest off all these numbers is the best to pay off. And yes the best one could change every month, untill you get close to paying it off. Then use that money to pay down the next one. I will try to update this to tell you how I am doing with all this. And yes I am asking for someone out there to prove im wrong.

Posted in Debt | 13 Comments »

13 Responses to “The Fastest way to pay off debt”

  1. LuxLiving Says:
    August 24th, 2010 at 06:31 pm 1282674714
    1282674714

    David Bach, author of "The Automatic Millionaire" and other financial books advises using this method. He calls it D.O.L.P.

    http://finance.yahoo.com/expert/article/millionaire/40724

  2. Doinnada Says:
    August 30th, 2010 at 12:00 pm 1283169617
    1283169617

    I am glad that someone else is putting out how the lowest debt/ highest interest methods are flawed

  3. Jerry Says:
    September 3rd, 2010 at 07:55 am 1283500527
    1283500527

    I think that "flawed" might be a bit strong... the thing about starting with the smallest debt first (which may or may not be right for every person) is that it does give some sense of progress. Many people need to have some form of insurance that they are making progress or else it will lead them to lose interest and put their heads back in the sand. Others can attack the debt issue head on and remain focused and determined. I wish you the best in paying off your debt in thirty-some months! That will be awesome!
    Jerry

  4. crazyliblady Says:
    September 6th, 2010 at 01:11 am 1283735503
    1283735503

    Let us all know how it all goes.

  5. crazyliblady Says:
    September 6th, 2010 at 01:14 am 1283735684
    1283735684

    I forgot to mention that it sounds like you are not taking into account the possibility that anything could go wrong to foil your plan. Do you have backup savings in case of car problems or other unexpected expenses?

  6. Doinnada Says:
    September 10th, 2010 at 02:54 pm 1284130469
    1284130469

    Ok so flawed might be a strong word. If there is a way that works for your situation. Like the reward of paying something off completely, then by all means do that. I am just letting everyone know that there is another way to pay down debt faster.

  7. Doinnada Says:
    September 10th, 2010 at 02:58 pm 1284130700
    1284130700

    crazyliblady
    I am getting a bonus in Oct. With that money I will pay off some other bills I have not listed here. In total they are about $1000. With what is left over i will be paying off debt and putting some aside for emergencies.

  8. Doinnada Says:
    September 11th, 2010 at 02:17 am 1284171452
    1284171452

    As of today my family has not used credit cards once this month. We are down to 65,127 owed to all these debts. i did just get a medical bill for about $200. This is not paying anything extra just yet. Only spending $80 on groceries this month has been a help.

  9. crazyliblady Says:
    September 11th, 2010 at 07:07 pm 1284232039
    1284232039

    How do you spend only $80 per month on groceries? Do you use coupons? Grow a garden? Own a goat or cow? I am pretty frugal, take my own bags, make my work lunches myself most of the time, take my own tea bags, and I still wind up spending between $50 and $90 on groceries weekly for 2 adults and 2 cats.

  10. Doinnada Says:
    September 12th, 2010 at 12:08 am 1284250080
    1284250080

    i have only spent 80 this month i will probobaly go again. Last month i spent 250. i am also in the navy so i go shoping at the commisary. other than that i am smart about what i buy. chicken thighs are cheaper than chicken breasts. i buy ground turkey by one pound logs that are one dollar.

  11. Jerry Says:
    September 17th, 2010 at 08:28 pm 1284755292
    1284755292

    Nice! Commissaries lead to one of the great hidden benefits of serving in the military, and I miss being able to go there for shopping. It was definitely one of the best forms of insurance for keeping the food budget in check. Good job!
    Jerry

  12. Doinnada Says:
    September 20th, 2010 at 02:46 am 1284950799
    1284950799

    Just remember that its what you shop for. just because i shop there dosent mean that i am saving money over store brands. the commisary is all name brands so i could save even more by shoping off brand at normal stores with coupons.

  13. Doinnada Says:
    October 8th, 2010 at 01:40 pm 1286545212
    1286545212

    An update on my progress. I got my October bonus, and i was able to pay off three credit cards. Totaling about $2000. With this I will have $170 that i was paying toward those to put in other places. With all that it brings my total debt down to $61600 and still on plan with twenty nine months left

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