You cut the MOST expensive items FIRST when paying off debt-yes?

[StarsInHerHair]

then WTF are they doing other than cannibalizing the USA? These wealthiest of people want everything, the greed is almost unnatural to me

what is motivating ALL the wealthiest in ALL the 1st World Nations to turn like zombies on their country of birth?

[Curmudgeoness]

1. The most expensive items, you mean like the wars?

They are making a tremendous amount of money on the wars. Can't cut that. Cut the heat from the poor. Do away with Social Security. Stop NPR and PBS in their tracks.

[RegieRocker]

9. Actually you stop spending (paying) money on the least needed first

and then work your way up. So the rich will always be last to suffer because they own the corps that control our government. Anyone that doesn't agree with this is a corporate shill.

[Curmudgeoness]

11. Easy to cut the least needed, when there is excess.

You can cut parties and redecorating and perks (which I don't see them doing). But when you get down to choices between food or heat, there is no way to determine what is least needed.

They are cutting more needed items, and not cutting excesses.

[RegieRocker]

18. Food and heat are equally needed.

[StarsInHerHair]

14. no you do first simultaneously, cut out the most expensive while getting

rid of vestigial stuff.

[RegieRocker]

22. Least needed no matter how expensive

[StarsInHerHair]

26. so long as your "least needed" does not imply children, seniors, the disabled

etc. I stand by my assertion: the MOST expensive WASTE is cut FIRST. You don't cut your kids' allowances and still go on a 5 star vacation. Unless you're GOP?

[RegieRocker]

28. Since when are human beings least needed? Only a gop would

Think of such a thing. Anytime you start baling out items to keep the ship from sinking or falling from the sky it's always the least needed. You don't dump the fuel! What is the deal with you?

[StarsInHerHair]

15. exactly the wars are a money black hole & not a real priority it doesn't help

Americans. Slashing and gutting The Great American Society is suicide.

[Zywiec]

2. My mortgage is my largest debt, how should I cut it?

Move?

:shrug:

[StarsInHerHair]

16. You are not the America, unless you have the power to take subsidies from

seniors, the disabled, & line your own pockets with that money. So are you a Bankster?

[FBaggins]

3. Not necessarily when paying off debts...

...but when you're trying to cut expenses, you certainly look at the big ticket items first.

As for debts... that Dave Ramsey guy actually says to pay off the smaller debts first. But he's dealing with addictions, not math.

[Yupster]

6. The theory is that if you pay off

you smallest credit card first, you've accomplished something in just a few months and you can put the amount you paid toward it onto your next smallest card.

If you go after the largest one first, you don't ever feel like you're getting anywhere.

If you're as far in debt as the US, you cut pretty much everywhere.

What are the needs and what are the wants?

The wants need to go first to keep the needs intact.

[FBaggins]

7. Oh I get it... and I agree.

It's just that it doesn't make sense from a mathematical standpoint. If I had debts, I would go after the highest interest rate first... but I completely "get" that the person who is addicted to debt needs a different perspective.

Where I disagree with him is that SOME people are not in debt because of a spending addiction and/or poor money management... they fell down the stairs and then lost their job. When they (literally) "get back on their feet" they haven't suddenly become someone who is addicted to debt... they're just someone who HAS debt. That person (IMO) should make the most of every dollar by paying off the higher interest rate debts first.

The wants need to go first to keep the needs intact.

Of course. The problem is that we don't agree on which is a "need" and which is a "want".

Then... to go back to a Ramsey-ism... there's always the option of "getting a bigger shovel". Which means higher taxes for anyone who can afford to pay.

[customerserviceguy]

12. You're right about the largest interest rate first

But the "snowball" technique is more psychologically satisfying. When you're depriving yourself of things you used to get a lift from by buying them, you need to get your reinforcement some other way. Watching eight or ten credit card bills per month drop to only two or three in a year gives a tremendous feeling of progress.

In the end, the difference in interest saved is not going to be terribly significant for most people, anyway. Knowing that you've conquered your debt is worth more than the few bucks involved.

[RegieRocker]

29. Higher interest rate is not right. Least owed, pay off, then the next least owed.

[Statistical]

20. The reality is his assumption is a safe one to make.

Very very very very few Americans live debt free and then have a one-time event that pushes them into debt.

Average American has $14,750 in credit card debt. Most of that acquired during the good years slowly accumulated by spending slightly beyond ones means (living a $62,000 lifestyle on $60,000 in income).

So while there may be some ultra rare exceptions his assumption is generally valid.

[RegieRocker]

19. The most important aspect to your statement and you did not

mention it is. When you party off the first card your money is no longer paying interest which has no value for you.

[wizstars]

23. You pay down the debt that is COSTING YOU THE MOST in dollars!!!

It may be a low-interest debt that has a very high principal, or a high-interest debt with a balance close to a low-interest debt, but which is costing you more in interest/finance charges.

This is the most efficient way to use the dollars at your disposal. An awful lot of "financial gurus" have failed to see this, to the detriment of people who take their advice.

My grandfather always told me that paying interest is "buying a dead horse." The less dead horse you buy, the better off you will be.

[w4rma]

4. Citizen's United allows wealthy people from other nations to canabalize US! (nt)

[notadmblnd]

5. I don't know.... all the sparkley things?

I've been trying to figure it out for ages.:shrug:

[Lil Missy]

8. No, not necessarily.

[Kaleva]

10. I kinda like living in a house; especially during winter.

[lonestarnot]

13. If I were rich about now, I'd be throwing money out of every window. There time is soon approaching

[ProgressiveProfessor]

17. Not always. Depends heavily on the situation

[slackmaster]

21. You pay off the debts bearing the highest interest first

And work your way down the food chain.

[wizstars]

24. NO. See my post above--it's time to bury that myth.

[Statistical]

25. Its not a myth you are just confused.

You DO pay the debt with the highest interest rate regardless of actual interest amount.

An extreme example to illustrate the point.
You have a $200K mortgage with 6% interest. ($200 in interest per month)
You have a $1000 credit card with 20% interest. ($20 in interest per month).

Now say you have $300 left over at end of the month.

Paying $300 extra principle on the mortgage would save you $1.50 in interest.
Paying $300 extra towards the credit card would ave you $6.00 in interest.

You pay the debt with highest interest rate first, not the largest nominal payment.

[RegieRocker]

30. All of you are confused. Start small and work your way up and out of debt.

[Paka]

27. Wants vs. needs should be the first criteria.

But after that, the big tickets items make the most sense. Like the two obscene wars the PTB are addicted to. :evilfrown:

[RegieRocker]

31. I see where this post went awry. Debt and spending are two

seperate problems. First you cut back to the necessities on spending then you start chipping away at debt starring with the smallest. It has nothing to do with psycho babble. It's common sense and simple math.