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Debt Avalanche vs. Debt Snowball

July 17th, 2008 at 02:11 am

I have read Dave Ramsey's book and really enjoyed it. I've also listened to his show and got some wonderful advice and ideas.

I just stumbled across this new method called the Debt Avalanchehttp://www.consumerismcommentary.com/2007/08/01/paying-off-d.... It's basically the same but puts paying off debt before creating an emergency fund. I dont see why they can't be done at the same time. I mean I understand the point of having an emergency fund because stuff happens. But you can tuck money aside while paying off debt. Now I wonder...which one would really eliminate my debt quickest??

5 Responses to “Debt Avalanche vs. Debt Snowball”

  1. ANonnyMouse Says:

    While I understand the theory behind concentrating solely on paying off debt and foregoing contributing to an emergency fund, it also makes no sense, IMNSHO.

    If you have no emergency fund because you have concentrated so single-mindedly on eliminating credit card debt and an emergency comes along, what do you have to do?


    C H A R G E !!!


    @@ You have just defeated the whole purpose.




  2. merch Says:

    Dave Ramsey wants you to feel unease with the small EF. The purpose is that it motivates you that much more to get out of debt.

    Personally I think you should concentrate on one or the other. Most people are not making enough to concentrate on both. If you had an extra 2k or 3k a month you could probably do both. That why he also says to stop retirement savings.

    He wants you to get out of debt as quickly as possible and then steps 4,5, and 6 are all done at once. So 1,2, and 3 should take less then 2 years.

  3. my english castle Says:

    I think Ramsey's right. You need to have cash to fall back on or you end up always turning to the credit cards and paying all that interest. Babysteps, babysteps, babysteps.

  4. Flexo Says:

    The debt avalanche has the emergency fund as Step 0. In fact, the debt avalanche suggests doing exactly as you say, creating a sufficient base for the emergency fund first and then building it up while reducing debt.

  5. Flexo Says:

    The biggest difference between the snowball and the avalanche doesn't have to do with the emergency fund, it's the order that the debts are prioritized. More info here:

    http://www.consumerismcommentary.com/2008/07/07/the-correct-way-to-pay-off-personal-debt-the-debt-avalanche/

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