Dave Ramsey is Good at Psychology

Nearly two years ago I wrote an article that refuses to die. It was called “Dave Ramsey is Bad at Math, ” and it took a critical look at various debt repayment strategies. Truth be told, I actually intended that article to be a critique of an undeniably dumb debt repayment scheme that was outlined in “The Automatic Millionaire” by David Bach, but I just couldn’t resist the provocative title. To date, that post has garnered hundreds of comments.

While I still stand by my mathematical results, which show that Ramsey’s Debt Snowball approach to debt reduction is not the most efficient way to pay off your debts, there are undeniable psychological benefits to Ramsey’s approach. In fact, I explicitly recognized these psychological benefits in my original article, but I admittedly still came down on the side of the math. But as many people were quick to point out:

“It’s not about the math! If people were good at math, they wouldn’t be in debt in the first place.”

It’s also worth noting that the Debt Snowball is just a small part of an overall debt reduction strategy, which Ramsey has formalized in his ‘Baby Steps.’ So even if you don’t agree with the Debt Snowball per se, there’s still a lot of wisdom in the system.

Anyway, back to the matter at hand… Perhaps the biggest thing that I’ve learned in the time since I first published the ‘Bad at Math’ article is that people are really passionate when it comes to Dave Ramsey. A lot left some really insightful comments, and I really can’t say it better than them. Thus, I’ve trolled through the comments section and plucked out of snippets in support of the psychological benefits Ramsey’s strategy.

Here we go:

“Yes, you save money by paying off the highest interest rate debt first, but you’re missing the psychological reward of not having to cut a check for those trivial debts month after month.”


“…it doesn’t matter witch method you use ‘highest interest rate, ‘ ‘lowest amount, ‘ or ‘hang your bills on the wall and throw a dart at them.’ It is that you do something and get control of your money. Personally Dave’s ‘debt snowball’ will be a huge motivator, but is all about changing behavior.


I find Dave Ramsey to be a good motivational speaker. I have been listening to him everyday just to keep me on track. Listening to people who have paid of their debt, and are in some cases worse off than I am, is very motivational. I’m in it for the emotional aspect of it.


“You are using your head way too much. Personal finance is 80% behavior and 20% head knowledge. Yes, it would save a little bit of money to pay off the high interest rates first, but it’s about a whole lot more than that. If you go on a diet and the first week you lose a few pounds, you think, great I can do this, this works. It’s the same thing, you eliminate a payment and you start to see that you can do this stuff.”


“It is emotion that got you into the mess, and it is emotion, not math, that will get you out. I am not saying to totally ignore math, but you have to get quick wins to stay motivated… I can tell you from experience though, Ramsey’s method works and my life has never been better financially because of his common sense approach to personal finance.”


“Ramsey’s approach certainly doesn’t make the best financial sense. But as a CFP who has worked with individual clients for over 10 years, I know that lack of self-dicipline is the greatest factor in financial failure.”


People are not computers. People need positive reinforcement and the emotional boost given by getting bills paid off and starting with the smallest ones does just that. I can tell you from experience that I have tried and failed with other methods of getting out of debt but I am sticking to the debt snowball.


The reason Dave does not do the math, and instead says attack the smallest first is simple. He states that he wants you to have “success” as soon as possible. That way you will continue and not quit. He mentions you could do the math, but by knocking off the smaller ones first you will have the perceived effect of results, sooner. Like the old saw: What we percieve… we can achieve.


I think what Dave is doing with the ‘snowball’ is giving people motivation and hope. Beacuse paying the lowest balance debt first give you the feeling that you are making difference…

So there you have it. And if you’re still not convinced, then consider the words of NCN from NoCreditNeeded, who dug himself (and his family) out of more than $11k in debt by following Ramsey’s principles:

“The reason that Dave’s plan works is that it provides visible evidence of progress. There is a huge psychlogical lift that occurs when you see an entire debt paid. As someone who paid off over 11K in less than a year, I can promise you that Dave’s plan really does work.”

(NCN communicated this directly to me, so it’s not in the earlier comments.)

65 Responses to “Dave Ramsey is Good at Psychology”

  1. Anonymous

    I’ve read Dave’s “Total Money Makeover” and listen to his show fairly regularly. IMHO, his credit advice is not too harmful, but his investment advice is both stupid and risky. I love how the Ramsey zombies are coming out of the woodwork to criticize this post. It’s hilarious to see people who only regurgitate DR talking points act like they know what they’re talking about. It’s adorable, like a little kid who comes home from kindergarten and informs his Mommy about how the world works. So cute!

  2. Anonymous

    You should retract the title even now.

    Dave is actually quite good at math. He has learned (he says) from his EXPERIENCE with people who have already gotten themselves in trouble that behavior and motivation (read: intensity) are what get people out of debt. Dave understands the math of these arguments completely, Nickel, he always has, but you are giving an insult undeservedly (and on an ongoing basis) to someone who doesn’t need his intelligence insulted.

    You should retract the title. In print. On the site. Even now.

    My goodness, I wish that people who criticize Dave would at least READ his material before they begin… over 95% of the time they don’t. You owe the man an apology. In print.

  3. Anonymous

    There is also one other benefit that Ramsey’s plan has, which incidentally has a slight mathematical aspect to it… for me, my problem is that I tend to procrastinate my payments until their due date. Unfortunately this means that I’ll sometimes forget about a payment until it’s too late. Then I get charged an additional $40 for the late payment (which in some cases is much more than the interest itself), hence the slight math aspect. And this problem is exacerbated when you’re trying to remember the due dates of multiple payments. Using Ramsey’s approach, you can knock out the smaller debts earlier and have that much less to remember.

  4. Anonymous

    OK, I guess I’m seeing this conversation a bit late, but I thought it worth replying to. People are making comments about “sheep” and “dumb people.” I dealt with the same thing. My roommate (who has always thought himself intelligent with his 130 I.Q.), loves to call me broke and make fun of me for being “the dumbest smart guy” he knows (I have a 145 I.Q.), whenever I say I don’t have the cash to go in on a pizza. Truth be told, I don’t have it because I made a choice to put all excess funds on credit card balances. I’m not dumb, and I’m very good at math. But I still got into a mess. Because being good at math and having willpower to use logic over emotion are two entirely different things. He ridiculed me for getting on Ramsey’s plan, but now that I have been on it for 6 months and paid off 3 of my 12 debts, he is starting to copy some of my methods. He counseled me, “Rob, you might just as well admit to yourself that you’re always going to be in debt — it’s the American way.” I told him he was wrong. And I stand by my statement.

    My point is, we’re both fairly intelligent people, not sheep or morons. We have very different viewpoints. Mine is no more or less valid because I do what an intelligent person recommends. I once heard it said that you can get a bachelor’s degree when you think you know everything, a master’s when you realize you don’t know anything, and a doctorate when you realize you don’t know anything, but neither does anyone else. And my point here is simply that, if you want to be truly successful, it’s good to follow Stephen Covey’s advice on being INTERdependent, and allowing yourself to listen for good advice from others. You don’t need to follow one man’s entire plan verbatim, but there are some good, practical parts to Ramsey’s plan, especially for someone like me, who is good at math, but still makes quick, impulsive decisions on money-spending. It provides a second-thought process and help on reducing spending, along with a bit of cheerleading to counter the emotions leading to desire to purchase.

  5. Anonymous

    I have question about the earlier posters who payed off 52k in 15 months and 34k in 2 years, etc.

    How in the hell did you get into such debt in the first place if you could afford those kind of debt payment in the first place?

  6. Anonymous

    Interesting discussion. I agree with many of you.
    1. People with a little sophistication and self-discipline don’t get into massive debt; and even if they do, they can figure out how to pay it off most efficiently without help from Dave Ramsey or anyone else.
    2. Steps 1-3 show are very logical; but then, there is really only one one to pay off debt: by PAYING IT OFF. However, that requires the kind of self-discipline that many people just don’t have, or don’t think they have. Ramsey provides the kind of enthusiastic cheer leading and support that many people need if they are hopelessly mired in debt. He acknowledges their struggle, gives them a “community,” and even provides a celebration if they succeed (debt-free scream). That is Dave Ramsey’s real strength. His compassion with people (to whom he often gives his books for free) is quite apparent, and I believe he does change lives. I would not call people who follow his steps “sheep” or say that they are part a “cult” since support communities for people who embrace debt-free living and frugality have always existed, and they are important. I was once inspired by the book “Your Money or Your Life” (by Robin and Dominguez), but I have never seen a champion of debt-free living like Dave Ramsey. In that respect he’s my kindred spirit, and I am thrilled that he is making this concept cool.
    3. Steps 4-6 make sense as well, but the order is not that important. I, for ex., paid off my mortgage before really turbocharging my retirement savings (while my friends lost their money in tech stocks). I also think that saving 15% is not enough.
    4. Step 7 (‘get wealthy and give”) is more an afterthought than any real “step,” and Ramsey’s investment advice is generic (“a good growth-stock mutual fund”) and flawed. Assuming the stock market returns 12% on average, he repeatedly tells people to take out 8% of their retirement funds annually. That is TWICE as much as anyone else recommends. Anyone following that “advice,” especially in this market, would definitely outlive his money. People seeking investment advice should read Money Magazine or Kiplinger.
    5. Ramsey’s take on credit cards is illogical. Calling everyone who’s using a credit card “stupid,” is stupid. Sure, people with $30k cc debt need to cut up their cards, but people who pay off the balance every month can obviously handle them. I understand that it is possible to get by without credit and a credit history, but why make life more difficult than it has to be?!

    In conclusion, Dave Ramsey is a really decent guy who is helping many people who otherwise would not find their way out of the mess they’re in. For those of us already debt-free, he provides a great service to the indebted masses or perhaps just good entertainment. In any case, he helps changing the attitude toward debt in this country, and that is definitely worth something!

  7. Anonymous

    I think Tim’s analogy to boats was a really good one, and very visual. Nicely put, Tim.

    “Let me put it this way… Let’s say that you and Dave both build boats. However, you design power boats that are built for speed and Dave designs life boats for ocean-liners. What you are doing with your articles is, in essence, blasting Dave for designing a boat that does not fulfill the purpose of your boat. The purpose of his design is completely different than yours: his boats rescue people and are meant to withstand turbulent waters; your boats get people to their destination as fast as they can go. Both your purpose and his are GOOD, but to compare the two, much less lambaste him for designing life-boats, is sophomoric…”

  8. Anonymous

    Hmm. I still think you fail to see the point and why your first article has no basis nor merit.

    Let me put it this way… Let’s say that you and Dave both build boats. However, you design power boats that are built for speed and Dave designs life boats for ocean-liners. What you are doing with your articles is, in essence, blasting Dave for designing a boat that does not fulfill the purpose of your boat. The purpose of his design is completely different than yours: his boats rescue people and are meant to withstand turbulent waters; your boats get people to their destination as fast as they can go. Both your purpose and his are GOOD, but to compare the two, much less lambaste him for designing life-boats, is sophomoric. Further more, he doesn’t criticize you because your boat is different than his: the people who will use your boat are not in an emergency (typically) and are not really in survival mode.

    Do you see the point? While both your methods have to do with paying down debt, their PURPOSE is DIFFERENT and to criticize him for a different purpose is naive at best, harmful at worst. Do you see what I’m getting at? Do you honestly think that people in crisis mode who have gotten themselves into so much debt that they can’t pay for basic food, shelter and clothing that they are going to be able to use your “boat”? Perhaps there are those who can, but I am fairly certain that those who can are few and far between.

    Why don’t you simply retract the original article, which has neither basis nor merit, and call it: your method and his method have different goals and are for different people at different stages of the financial road. That’s it…you both make great boats, so allow each to do his job and really help people where they’re at.

  9. Anonymous

    As a consumer loan officer for 15 years and great at math I agree the method you describe is best but like I have read and agree with Dave’s gives you one little “success” is a great motivator. Most don’t think of the interest factor or they would not be in the financial shape they are in. I also worked as debt counselor for Consumer Credit Counseling Service of Houston Texas after I lost my job in banking in the late ’80s so I have a lot of one on one with individuals and couples with debt problems.

  10. Anonymous

    The Money Merge Account offered by United First Financial is the most precise way to get out of debt. Dave Ramsey has stated that it does not do anything that a person cannot do on their own and he is wrong. Factorial math says that if you have 6 different debts there are 720 possible combinations to attack those debts at any precise moment. The MMA system will tell you which one of the 720 is the precise amount of money to pay extra to which debts for your given situation. If Dave Ramsey were only open-minded enough to investigate what this system could do for his devout followers and incorporate it into what he teaches, he could help them collectively save millions of dollars of interest. But that would require him to say that there is a better way than what he has been teaching.

  11. Anonymous

    I think some folks on here don’t listen to Dave – or don’t listen well when they tune him in.

    Dave doesn’t claim his method is the only method. He’s a millionaire many times (MANY, MANY times) over and this plan worked for him and thousands of people he has worked with over the years. That is it.

    It isn’t the only plan out there. If you have a better one (and you are in debt) go for it.

  12. Anonymous

    The important thing about Dave Ramsey’s method is that it’s about changing a bad behavior (living beyond one’s means) as much as anything else. For those just starting from a position of being close to drowning in debt, the early positive reinforcement you get from the debt being paid in full is invaluable.

    Once you have that early positive reinforcement, and you’re with the program and working on the bigger debts, by all means attack the $8300 Visa credit card debt at 24.9% before you attack the remaining $11,500 on your car loan at 12.9%.

  13. Anonymous

    @nick–if you have a loan out for 10,000 dollars and you have 10,000 in a savings account (escrow) to pay it off at the end of term, I would say you are not in debt except in the technical sense. That kind of “debt” is not the kind that people are writing about in this blog, rather it is arbitrage, or attempting to use borrowed money to earn more in interest than it costs you. Assuming your budget is solid, everything else is straight in your financial world, and you are not lying to yourself, you are not “in debt” in that scenario, you have simply made a financial arrangement.

    But, be that as it may, many a slip and a slide can happen before the end of the year and time and chance happeneth to them all.

  14. Anonymous

    While I agree that tangible results are necessary to feel successful, I would like to point out that we can focus on a variety of measures beyond the “quick win.” of paying off a small bill totally.

    I have a huge balance at about 5%, distributed between two credit card accounts. It will be 3 years before they are paid off. I long ago made my peace with the fact that I am facing these debts for a while, there is no quick fix for it, and progress is incremental.
    The only fix available to me is a slow and steady one. And, now that I have fully accepted the situation I have put myself in, I am finding it to be very satisfying to complete my debt payoff strategy, even more so than being able to pay it off quickly. Working harder for it makes it more meaningful.

    With balances around $10k on each card, the “quick victory” approach isn’t relevant to my situation . (although, when I was younger I did experience the thrill of paying off a $600 department store car over several months). What I *do* focus on to feel successful are the incremental succeses that a) every month, due to my $700 worth of payments, my finance charge decreases by $3, which amounts to $36 over one year that doesn’t come out of my pocket and b) that every month I have *succeeded* by making *one out of 36 total payments* as I per my financial plan, and (c) finally, that when my debt is paid off in 3 years, the $700 that I currently pay per month will become an extra $700 savings deposit per month. Since I’m living now without spending that $700, I can do it in 3 years, too.

    Thanks for the interesting article.

  15. Anonymous

    These people sound like morons in a cult who will throw any real rationale out the window in favor of these nonsense behavior issues – which in fact just means you are weak minded. That is why the typical Dave Ramsey listener is practically at the poverty line and barely literate – just listen to his show and the callers’ profiles. No wonder they take financial advice from a guy whose only qualification in life is that he’s part of that small minority of Americans who have done so bad with their finances that they have had to file bankruptcy. Though my favorite has got to be how he says certain policies, etc. are illegal or not mandated even when they are. He can’t even get his facts straight. I was just listening to a show of his where a caller said he was getting charged a fee for having more than 6 transactions per month in his money market account and was told that was federally mandated. Dave said it wasn’t, what a friggin moron – YES IT IS. The blind leading the blind.

  16. Anonymous

    thank you, pamela, for saying exactly what i was thinking. dave ramsey has helped many people, and the negative and sometimes nasty comments of the few leaves me wanting to reaffirm my mission in life to surround myself with positive, upbeat people. thanks again to you, and dave.

  17. Anonymous

    There are two things that I think are important to note regarding Dave Ramsey’s plan. The first is that many people who start the plan have MANY debts. For instance, when I started, I had 15 checks a month I was writing, and that was only because I had 3 debts in forbearance. I was getting paid every two weeks, and simply the amount of time and brainpower used up to juggle when those payments were going to come out was a huge struggle for me. When I started the Dave plan, I knew that is wasn’t the optimal plan math-wise, but I also knew that within 2 months I would have 2 less debts. Within 8 months, I had eliminated 5 debts. These were little things, some with no interest at all, but it made working my budget SO much easier to have less bills.
    The other thing that I want to point out is really for the detractors who say things like “you must be really dumb” or something like that to people who follow the plan. You know what? Some of them are! For instance, my mom is an “artsy” type, an actess. She is simply not good at math, and has had real trouble with planning. Since starting the Dave plan, she has actually made out a budget and stuck to it. She has savings for the first time in I don’t know how long. She has eliminated some debt. She has made positive moves to help herself financially. And you know what? She probably isn’t aware that it isn’t the “best” possible way that she could do it, and I don’t care. She is so much more at peace now. I think that telling someone who has made really positive changes in their behavior, who has worked really hard to change habits, that they are “stupid” or “blind” for not making a potentially better change, is not really seeing the whole picture. Sure, there are better options. Sure, they could save even more. But they ARE saving, and they ARE making progress. My mom made a habit of cashing out workplace retirement plans whenever she changed jobs, which makes me shudder in horror. This time, though, I think that she is actually considering the future, and won’t ever do that again, which makes Dave’s plan totally worth it, in my opinion.

    Sorry this was so long! I guess you could say that I am a bit of a Dave fanatic. Congrats to everyone who has made the really hard choice to turn your lives around!

  18. Anonymous

    OOPS!!! Smallest loan vs Smallest interest is missing a sneaky little variable… The minimum payment percentage. I built a complex spreadsheet that when run shows the fastest way to pay off debt is to pay the lowest minimum percentage card off last. It really supprised me but when all was said and done I had spent enough time building a 10 page spreadsheet that could calculate credit cards, cars, house loans and do intermitent payments that I could have gotten a part time job and just paid the stupid debt off anyway. Joined with Dave Ramsey and paid it all off in 14 months!!! I woke up and won.

  19. Anonymous

    This has been mentioned. Dave has mentioned that in the early years of his counseling, he did advocate the highest interest rate first plan. Which makes me wonder if that is how he did it. But when they switched to the illogical, for-dummies-only lowest debt first plan his clients were more successful.

    BTW, we must not always assume the doing the snowball method puts the highest interest rate last in the line-up. In our case our biggest debt (a $40,000 college loan) has the smallest interest rate.

    But the most important part of the plan that I can see is not the debt pay-off which would work itself out anyway given time, IF you are working the rest of the plan: keeping a budget. Sorting out and forcing yourself to stay in a budget is the single most important part of his plan. Without it, no debt relief, no savings, squandered retirement….

    I believe that he only advocates stopping or reducing your 401k if it’s going to take you more than 2 years to get out of debt. We are reducing our to the ‘match’, which I think he would be perfectly fine with given our ages. And we will not go above the ‘match’ when we do increase it, but will make it work harder for us. There is a lot of common sense with Dave Ramsey, but it is easy to find something you don’t like about the man or the plan and start gnawing away at it like a dog on a tick, but I guess that is what agressive personalities do to some people, it just drives them nuts!

    I can tell you, from this, horrible side of the debt mountain (that I had no idea had grown that high!) that it would be overwhelming to the point of daily tears if I did not see that in already a month we will have reversed a jammed up budget (that shouldn’t be!), have excess to put in a small emergency fund, and two small credit cards (at 14.99% and 23.24%) will be GONE! In our case the monthly snowballed payments will not make the plan work in the expected 30 months, the fact that we have freed up other money in the budget will hammer out half our debt load. Which I suspect is the case with most people working the debt snowball.

    Sorry for writing so much. I read both your articles and I want to thank you for being fair-minded and only the title of your original piece was a sensational. It’s made for a much kinder treatment including the comment section than some other blogs I have seen. Very nice.

  20. Anonymous

    My wife and I attended Dave’s Live event in Kansas City (11,000+ rocking Kemper Arena – he can’t be too wrong) yesterday and he mentioned how the baby steps program was tweaked for 2 reasons

    1) The first step of $1000 emergency cushion, because so many people were “falling off the wagon” due to Murphy, so they added this change

    2) Baby Step II adjusted because after so many calls and letters from disaffected/disallusioned people who didn’t feel they were getting traction, the boost of paying off *something* was the difference between success and failure.

    Dave did say that if you are better motivated by getting rid of high interest debt first, then go for it, because you’re still getting out of slavery, but the vast majority needed the snowball boost.

    Additionally, Dave is selling his products at the event, but most of them were seriously reduced. The books, audio books and software were just $10 each. Hardly indicative of someone out to just get our money.

    Michael: targeting debt free except house Nov. 2009 – over $40k gone!

  21. Anonymous

    Nick (from #40), I’ll keep you in my prayers and hope the best for you. Unfortunatly you are a disaster looking for a place to happen. Dave has a phrase that is appropriate in this situation that I’ll point out for you in just a moment. You ask “It’s important what that debt cost you. if it cost you nothing… what is the problem?” To now quote Dave “LIFE HAPPENS”, that’s what the problem is!! The less respect you give MR. MURPHY the harder he’s gonna smack you around when he finds you. Good luck in your fantasy land, you’ll need it at some point.

  22. Anonymous

    I find Mr. Ramsey’s humorous and vivid teachings helped me to wake up from being “numb” about my debt…that is the psychological power of what he has to offer.

    Nickel, in the bad at math thread, you admitted never having a debt problem and no current consumer debt. (No debt except the mortgage.) I think it is possible that you cannot understand the gut level emotional change that Dave Ramsey routinely inspires in people who carry too much debt or have debt problems…and that inspires their hope, behavior change, and turnaround.

    I mean, good on ya for being a math nerd and never having a debt problem, and all, but it really does strip the power out of your criticisms because you have never been desperate. May the Fortune Fairy continue sprinkling her prosperity dust upon you, and may Murphy never dish out more than you can handle!

    I guess an analogy for me is, I am a social drinker and can’t understand how my recovering alcoholic friends talk about alcohol. It just isn’t a big deal to me. It’s because I haven’t stumbled a mile in their vomit covered shoes. LOL

  23. Anonymous

    Nick. If you reread #32, I think you will see that I am coming at this business of debt from more of a spiritual side. So the I guess that if debt costs you nothing – spiritually … there is no problem. If in fact you go into debt out of obedience to God’s word, there may be a blessing. There is an example in the bible where a widow was instructed to borrow jars so that she could received a blessing from God to get out of another debt to save her sons from being taken as slaves. This story can be found in 2 Kings 4:1-7. The instruction to borrow is found in verse 3. Most financial bible teachers will say that there is no example of God using a loan to accomplish His purposes. But here is an example.

    But Nick, I don’t sense that you are approaching this from a biblical stewardship perspective. The danger in debt is not just the cost in interest, but whether or not you are personally libel for the repayment or if the lender has accepted something as the full collateral for the debt. It is a question of bondage and freedom. That is the cost of debt.

    In the case of the widow and the borrowed jars, presumably, returning the jars would repay the debt of the jars. This represents a biblically acceptable loan. However most consumer loans are not of this type and put the borrower in bondage.

    Think about it, if a loan for a car requires no interest payment for a year, are you are still in bondage to repay the loan? The no interest payment or even no payments until … is a common enticement that lenders use to sucker the consumer. They just jack up the cost of the item on the front end to pay for the “free financing”. Blessings.

  24. Anonymous

    I like the Idea to use the checks as a darts board… never thought about it I pay most of my bills on line so I could do that…. HAHAHA… and I shall name it “the darts of shame”.

    “Self motivation” I would rephrase it… “Self discipline”. As a man came from totally cash society, Americans are making not much of a sense sometimes yet… hey… “Your way or the highway” it is your money and I love using them.

    My view of the “credit” is as a whip, I can work my way out and put it a side, where as most of the population use it as a rope for long term purposes.

    Regarding D. Ramsey… I like to listen what he don’t say, to rephrase it for ya, what will he miss saying. As I believe devil is in details. As Nickel mentioned “Bad Math” is an issue. Especially when we talk money.

    Jim… I like to be in debt, if I have to pay 0% interest for a year… I’ll stay in debt for a year. It’s not important are you “in” or “out” of debt. It’s important what that debt cost you. 😉 if it cost you nothing… what is the problem?

  25. Anonymous

    Congratulatins on moving to get out of debt. For the spiritual justification of the “smaller to larger” debt repayment snowball stradegy, please see my comment above, #32.

  26. Anonymous


    Congrats on getting your first debt paid off! Enjoy that feeling, enjoy the extra cash-flow you freed up and throw it towards your next debt!

    I doubt anyone including Dave is mad at you for changing the order of your snowball a little. After all, you are being Diligent and paying attention, you have your brain plugged in.
    The Snowball helps keep people motivated and stick with a plan. If you are already self-motivated I see no harm with paying your debt off in the order you find most effective. Just be sure that you stick with the plan and throw the extra cash-flow on your next debt.
    Just make sure you really are self-motivated.

    I’m sure Mr. Ramsey would agree also, his goal is to get you out of debt. I have never heard him yell at anyone for changing the order of the snowball, as long as they stay motivated and stick with it.

    Keep in mind, most people do not have this self-motivation. That’s when the snowball executed properly serves its key function, to give you quick results and keep you motiveated.

  27. Anonymous

    Sorry, but I did not follow Dave’s plan for paying down my debt. Eliminated my biggest one first. $120 interest and $9 principal, monthly. DUHHHH. After my first, the next eight didn’t stand a snowball’s chance.

  28. Anonymous


    As far as your friend goes who is having problems getting a mortgage.

    I have a 5.75% 15 Year Fixed Mortgage. I don’t have a great FICO score because I haven’t borrow money in a while, I haven’t checked my score in about a year but it was 642 when I applied for my loan. That’s not a good score for those who don’t know. I don’t have anything bad on there, my credit is simply unestablished.

    Usually the best place to go for manual underwriting is a good local Credit Union, someplace where they look at the person, not just the FICO score.

    You know my FICO score is so low yet I have $30k in the bank and a business with over $150k in assets and no debt. I can’t get a good loan on a car based on my FICO score but I can write a check and buy it. (Not that I want a loan) It doesn’t make sense. But I love it because it makes for a great conversation piece. And I’m proof that you can succeed and live a better live without worshiping a FICO score.
    To add insult to injury I’m only 26 years old and have been following Dave for only 2 years. 90% of my assets I have accumulated since I followed Dave’s advice, before that I spent all the money I made. Much on Car Payments and Credit Cards. (When I was 20 I took out a loan secured by a CD just to build my credit. Because of a get rich quick book I purchased that suggested using other peoples money. What a fool I was)

    FICO score does not mean you are winning, like Dave says, it is an “I love Debt score.”

  29. Anonymous


    You might want to get your facts strait before bashing someone who has your best interest in mind.

    You say “Dave recommends cashing out retirement.”
    This is not true, on the contrary he discourages this strategy routinely if you listened to his program. He clearly says Do not cash out retirement unless you are trying to save your house from foreclosure. You will be hit with your Tax rate + a Penalty, so 40% of your money will be gone to taxes.

    You say he tells people you get a 12% fixed return on your money.
    This is not true, he says you can find mutual funds that have a 10 year AVERAGE track record of 12-15%. Some years it’s more than 12%, some years it’s less than 12%

    You say cutting up your Cards gives you bad credit. Yes, it does lower your FICO score. Do you know that you can get a mortgage without a FICO score? You have to use a lender that does MANUAL Underwriting. Not some monkey lender that only lends based on a FICO score. You can get the best possible mortgage rate if you use a lender that does Manual underwriting. Considering you don’t have any bad debts and you have been at your job for 2 years or more.

    Stop thinking the FICO score is where success comes from. Having a good FICO score doesn’t mean you are winning.
    There is only one way to have a good FICO score, and that is to BORROW MONEY. Every part of the formula that calculates the FICO score is derived from YOU BORROWING MONEY.
    For what? So you can borrow more money?
    This doesn’t make sense to me, I’ll keep my interest payments and build wealth so compound interest can work for me, not against me.

    So keep building your FICO score and in 10 years let us know how you are doing. I bet I’ll have more net worth than you, even if I make less money than you. 🙂

  30. Anonymous

    I feel so, so sorry for these people who buy completely into what Dave Ramsey is saying. For instance, like Deb here. Deciding not to “follow Daves plan” doesn’t mean “You want to stay in debt and think your living the normal way”. That shows the illogical thinking of many of Ramsey’s fans, and their rhetoric.

    Ramsey’s plan is presented as the ONLY way to get out of debt. Let’s apply that logic to other areas of life. For instance, if you needed to get healthier and lose some pounds, Deb would advocate going on a crash diet — the same way that Ramsey advocates a crash method of paying off debt. Using Deb’s logic from above — anyone who doesn’t do it Deb’s way – crash dieting – isn’t really “motivated”, even a person who makes permanent lifestyle changes instead of trying a extreme quick fix. Uh-oh, though – going on a crash diet can cause vitamin deficiencies, or other problems (like a guy I know who developed kidney trouble on Atkins). And the same’s true with Dave Ramsey. You can get in trouble following all of his advice. The idea that only he has the true answer for you is hogwash. Use your head, and keep looking around.

    No financial “guru” is perfect, and it’s smarter to read widely, and learn about finance on your own. Dave’s plan suggests idiot things like cashing out retirement savings to create an emergency fund, and claims that you’ll have a fixed return of 12% on your investments. You should read this review of one of his books which analyzes why this is bad advice: link

    And, if you cut up your credit cards after you pay them off, as Ramsey advises, you are doing yourself some serious damage in the credit department. I have a friend who is having serious trouble qualifying for a mortgage, even though he has savings and makes good money. Why? He never got a credit card, paying cash for everything, so he has a “thin credit file”. And he isn’t like a lot of Ramsey listeners, who have terrible credit histories.

    If you are a compulsive gambler or a true shopaholic who needs counseling to stop from shopping, then yes – I’d say that you should probably cut up your credit cards. But in other cases, you’ll do better by learning to budget, and learning to postpone certain gratifications – WITHOUT cutting up all your credit cards.

    Mortgage lenders would much rather see that you use credit responsibly — for instance, you take out a loan and pay it off faster than the average person, and pay more than minimum payments. Whereas if you don’t have any credit history, you’re an unknown quantity. So, sorry to say, but Ramsey’s advice about cutting up your credit cards is really stupid.

    If you don’t improve your credit, by learning to deal with credit wisely, it will impact you in more ways than you realize. For example, you’ll pay more to insure your car.

  31. Anonymous

    You people do not have to follow Daves plan. he is just letting you know what he did and some guildelines. He is not forcing anyone to do anything. I’m sure he cares less if you follow his way or not. You want to stay in debt and think your living the normal way, then do so. But like dave says you live like no one else then you will live like no one else!

  32. Anonymous

    Everyone mentions the psychological aspect of the “feel good” approach that Dave recommends. Did you know that there is a spiritual side to this approach that actually has higher value than just feeling good?

    The basis for this approach is found in the Bible. Proverbs 22:7 says “Just as the rich rule the poor, the debtor becomes the slave of the lender”. So when you are in debt you are in bondage. 1 Corinthians 7:21(b) says, “but if you are able also to become free, rather do that.” So if we are in debt slavery and we are able to become free, we should try to do that. There is more scripture to elaborate on this point, but I will leave it to these two passages.

    Here is a key assumption and if you don’t agree with it you might as well stop reading.

    The assumption is that if you have lots of “lender masters” (i.e. lots of individual debts) you are in more bondage that if you owed the same amount to just one master. So if you can get one debt paid off quickly you have one less “lender master” in your life than if you just tried to save interest by attacking a large high interest debt. Thus you are more free and in less bondage than the guy that still has the original number of “lender masters” but is saving a few bucks in interest.

    Dave’s approach of attacking the smallest debt first eliminates your bondage faster than any other approach because it gets the lenders out of you life faster than any other approach.

    Folks that follow the biblical principles of financial management do so not to get rich or save money, but they follow the bible out of obedience to God’s word. The biblical approach to money management is based on the view that we are stewards over what God has entrusted to us. We are not owners. God is the owner, and we honor Him by how we manage His money. In short a biblical stewards demonstrates Who they serve by how they manage.

  33. Anonymous

    Has anyone ever thought about a couple of
    ‘common sense’ items? Like…
    if a person tells only PART of a truth, knowing that he/she is PURPOSEFULLY withholding information that would EDUCATE people to PREVENT them or their children or grandchildren from feeling as if they had to listen to such drivel as Dave Ramsey or anyone else of that stature; is that person a liar by ommission? Do we as a society forget that there are lies of ommission? Are we so wilfully ignorant that we believe ‘carte blanche’ everything we see and hear and read?

    Is anyone interested in educating people to buy twenty-paid life policies for their children before they are sixteen (to my notion, at birth is best because of the cost of insurance); so that when they are forty or fifty they can ACTUALLY SEE that the money they invested is NO RISK and EXTREMELY VERSATILE… AND WORTH MORE than any snowball or other con or scheme that makes the rich wealthier and the poor poorer? Not to mention the end result and effects that is has on the economy? Why do people buy into ‘band-aid’ cures? Why do you feel as if you have to have someone think for you just to make them richer?
    Especially if they were the captain of a sinking ship that they had built from selling WHOLE LIFE insurance, and now you’re going to trust them to A- Tell you the truth; or,
    B- Trust them with NOT SINKING your ship?

    The reason Ramsey to my notion is a bad mathematician has already been proved by his own failure.

    This is a psych-job people. Figure it out for yourself. That’s what God gave us brains for.

    Go to someone who you KNOW that you know that you can TRUST. You don’t have to be sheep being led to a slaughter. Take a class on basic ECON 101. If you don’t you will be the mamby-pamby lukewarm that will be spit from the mouth. And the part that irritates me the most is that you will take the rest of us
    with you sailing on that ill-fated vessel.

    Just a thought or two.

  34. Anonymous

    Right or wrong, high or low, my wife and I are paying off our house next month. I’m 31, she’s 29. To us, having zero debt means more than the money we could’ve made investing the house payment divided by two and then multiplying it times pi R squared. If you don’t like Dave Ramsey, go watch Oprah. Maybe she’ll give you something real nice.

  35. Anonymous

    I’ve calculated my way (higher interest first but still paying more than minimums on other cards) and I compared it to Dave Ramseys way- My way I will have my debt paid off a month earlier and have saved about $1000 dollars…I can see how his method would give you more motivation if you’re not as disciplined about it- I’ve been doing spreadsheets and constantly monitoring my debt and I find that’s a better motivator than knocking off a credit card (though I only have 3) If I had a lot I might want to do it the Ramsey way.

  36. Nickel

    John, sounds like your future is looking bright. Out of curiosity, how much of your $630k networth is comprised of home equity vs. investments?

  37. Anonymous

    Yes, JT, we Dave Ramsey folk will get wealthy slowly…slowly, but surely. You know. the tortoise always beats the hare.

    After having listen to Dave for 2.5 years, we accelerated our payments on the house and paid it off. We are now completely debt free. We have a net worth of $630k. We have more than enough life insurance to sustain either one of us if one of use dies. The college fund is started and building. The retirement is growing quickly. And do you know the best thing? We give more money to charities and our church than we ever have in the past. I don’t say that to brag. I say that to let you all know the real reason to get out of debt. It’s not just for being able to live like nobody else in the material sense, but to live like nobody else and be able to give like you’ve never given before!

  38. Anonymous

    1. Credit Card Debt — Higher Interest
    2. Personal Loan
    3. Furniture Purchase
    4. Car Loan
    5. ALWAYS, ALWAYS, ALWAYS PAY STUDENT LOAN LAST (if it’s a Stafford, Federal Consolidation, Direct, etc.) — Why? It’s easier to defer or go into forbearance. Also, if your income is below certain threshholds, interest up to $2500 reduces your AGI for tax purposes, regardless of whether or not you itemize. Finally, if you die tomorrow or in 10 years, the student loan debt disappears. Think of it like a “reverse life insurance policy”.

    Ramsey plays on the stupidity of the American public. No one wants to do his or her own research to really make the best financial decisions. For now, we multitaskers will continue to get wealthy, while Dave followers get rich slowly.

  39. Anonymous

    I’d be interested in seeing some math showing the benefit of snowballing vs. paying of the highest interst first in this light–how is the total interest affected when you seriously reduce the length of the loan? For example I am not as intense as I could be every month, but taking it at a moderate pace I should get to my second largest loan with the snowball on the 13th month. I have approx. 56 monthes left at 15.75%. So for 12 monthes I pay the minimum payment of 270 accruing interest ocer that time. By the 13th month I have approx. $1500 (without the belt being too tight) a month to attack that debt. How many months will it take me to finish off that loan? How many months will I have cut off from the full term of the loan? How much interest will I save? I suppose I could get some rough numbers myself or figure out what formulas I need to use to show the interest added and what not. Obviously there are other things to consider like how much interest I paid on the smaller loans and how much would I have paid if those had gone full term? And all the numbers aren’t in my example, but I wonder how close it will come to being a wash?

    Another thing I’ve heard Dave R. say in a handful of instances is when it is obvious that someone has made the effort and truly changed their behavior and their view on debt that it would be ok to start attcking some of those higher interest loans. That probably isn’t his official stance, but it can be done….just a thought.

  40. Anonymous

    Passionate? Yeah I guess we are. His system works… but it’s just plain old common sense… something my grand mom had… and I did not.

    Until now. I’ve seen the light about how dangerous debt is.

  41. Anonymous

    I think there is a right system for each person. For those that can look at the numbers, use highest rate first, and get motivation by the fact that they’re paying off debt in the optimal way then that system is right for them. For those that need the emotional boost that they get from seeing one less debt or making one less payment, go with lowest balance first. Understanding and taking control of your finances is the real power behind either system and will work in the long run.

  42. Anonymous

    I get the point of paying debt first. But the concept of skippign the employer match is insane, no mater what your viewpoint. Say you get 100% match to 4% of salary and you make $50k. If you absolutely insist on paying debt first….

    Put the $2000 in the account and take it out as soon as you get the company match. sure, you eat the 10% penalty. But, now you have $1800 dollars (before tax) rather than $1000. Even if you have to wait till the end of the year to get it. In that case, you have jsut made 80% on your investment. I hope to God your debt isn’t charged at 80%.

  43. Anonymous

    My wife and I are using some of Dave Ramsey’s methods with great success. I don’t agree with every piece of his advice but for straight getting out of debt he is pretty good. We don’t like the cash envelope system so we tweaked it to where we use envelopes for the different categories for our receipts up to the budgeted amt for that month. I also like putting our bills on a CC for rewards purposes. It gets paid off every month so why not get the benefit.

  44. Assuming a 12% pre-inflation rate of return is way to high, especially late in life. Once you near retirement age, there’s no way you should be investing that aggressively. Remember, we’re talking about long-term averages. At or near retirement age there’s no way you can afford to have the majority of your assets heavily invested in the stock market at the risk of a prolonged down period.

  45. Anonymous

    LivingAlmostLarge’s issue with the 15% retirement fund being prematurely halted interested me, so I went ahead and started calculating it out.

    Let’s say that you happen to be 40 years old when you finally get out of debt. You make an average of 40,000 per year, and now that you have paid off your debt, you can begin fully funding your retirement.

    So what does that look like? Well to start out, you will be putting $6000 per year into your retirement fund, or 15% of your income. Of course you will likely get raises and cost of living increases, but we will simply remove them from the equation for simplification purposes.

    So $6000 x 25 (time before you retire at 65) = $150,000, right? Big number, but not enough to retire on, right? That’s why you have to invest.

    Over the last 200, 100, and 50 years, the stock market has seen an average annual growth of about 11.8%. Therefore, you can assume around that much of a return per year on that retirement fund.

    But remember how we removed the cost of living increases from the amount put into the fund in the first half of the equation? Because of that, we need to count inflation in the deal as well. After inflation (average of 3.8% per year of the last few decades), you can expect an 8% effective return on your investment instead.

    Okay, if you guys are still with me, basically what I’m saying is that you will basically be adding 8% more buying power to your retirement by investing it. You may actually make around 12%, but because of inflation, you can really only buy 8% more.

    Okay, so let’s say that after your mid-life debt free plan you manage to save $6000 per year for 25 years. After 8% yearly investment return, you will have 438,636 left over. Pretty nice nest egg, eh?

    Now, seeing as you have managed to live until age 65, you should reasonably expect to live to around 85 to 90. So with 20 to 25 years of retirement ahead of you, you need to make sure that you keep investing that money so that it keeps growing as you use it.

    So since after inflation you gain 8% on your retirement per year, if you simply remove that 8% to live off of per year, your fund will never run dry. 8% of $438,636 is just over $35,000, meaning that you can retire on almost your full salary.

    Now I know that this is a very rough calculation and because of my current lack of sleep may be littered with random errors, but I think you can get the idea. So what if you’re 40? Get out of debt, spend a couple decades putting back 15% and having fun with the rest (or even invest more if you want) and retire at almost your entire salary (although since you won’t have to buy expensive work clothes, and won’t suffer the cost of car wear and tear and a long commute, you may be bringing home more than when you worked), and enjoy not suffering under the weight of an insane amount of debt.

    Remember, your income is your greatest wealth-building tool, and once you free that up, the sky’s the limit.

    Oh, and by the way, what if you started putting away that same amount when you were 20? After discounting the cost of inflation, you still turn out with over $2.3 MILLION dollars.

  46. Anonymous

    If the credit card companies are loving this they won’t be for long! We, who are finally getting out from under the stupid way we have used money in the past (credit), have been empowered by Dave’s strategies (Baby Steps & Snowball) and will never go back! And we are sharing our success with everyone we know and more lives have been changed. If I were a Credit Card company I’d be worried!

  47. Anonymous


    I’m at the point where my interest and balances on my remaining credit cards are both just about equal, so there is no clear advantage to going either way.

    I’m going with paying off the oldest debt first since it’s stuck around longest. The important thing is just pick one and pay down on it with a vengence.

  48. Anonymous

    I think Bach is just trying to be different from everybody else out there. Ramsey says smallest debt first. Orman and others say highest interest rate first. Why not. Different strokes for different folks. I am still trying to decide how to attack my remaining debt but I won’t bore you with that here.

  49. I described Bach’s debt reduction strategy in the other post, so you can read more there. Basically, he suggests that you divide the total balance on each debt by the minimum amount due, and then pay off the one with the lowest value first. It makes no sense from either a mathematical or a psychological standpoint. This isn’t to say that David Bach is a dumb guy, because he’s not. I actually quite like a lot of what he talks about. But… There’s no rhyme or reason to his debt reduction method.

  50. Anonymous

    I’m curious — what is the “undeniably dumb” debt repayment plan touted by David Bach that you refer to? I just saw a PBS special with him and he seemed pretty logical. Thanks!

  51. Anonymous

    We got Ramsey’s book out from the library and catch his show on radio once in a while (both free of charge). We are on BS2 and have a plan in place to pay of $54,000 in debt this year.

  52. Anonymous

    Great article! I agree that Dave is great at psychology even if he is bad at math. I’ve seen his debt plan work fo so many people it’s hard for me to not be a believer. Good to see all the comments from everyone, there are a lot of great points being made in this post as well as the original (math) one.

  53. Anonymous

    I totally agree with this. Ramsey has figured out that there’s much more to personal finance than the finance. If people were doing math, they wouldn’t be getting in the sorts of messes tha they do!

  54. Anonymous

    Debt Monster – that’s AWESOME! You have to call that one in on Debt Free Friday! $52k in 15 months is, as Dave would say, “rowdy!” It took us 24 months to pay $34k off.

  55. Steven: That’s fantastic! Great to hear that things are going so well for you.

    debt monster: Glad to hear that you’ll be ‘out from under’ as of next month. What a great feeling that will be!

  56. Anonymous

    I too am a Ramsey fanatic. I bought the book and I paid for a year subscription to listen to his podcasts (3 hours a day). We will be debt free next month but the house. We will have paid almost $52K in debt off in 15 months. This is the first time in my adult life that I will be debt free and I can’t wait until next month. I do owe this to Dave. I could not have done it without him. I really used to think that to afford meant you could pay the monthly payments. Boy was I wrong!! I have grown up financially in the past year and have learned to say no to things and delay purchases when I can actually pay cash for things.

  57. Anonymous

    I do remember the original article, I imagine some of my comments are above… I have to be a strong advocate, we have changed our position from Negative $123000 (debt paid off) to a positive net worth of over $90,000 , in over 3 years by following the baby steps. That is a well over $200,000 difference, for those like myself that aren’t that good at math :)…

  58. Anonymous

    Oh yeah…almost forgot. For those who question paying money for books to tell you how to get out of debt – I paid $20 for a book(The Total Money Makeover) that helped me pay off some $34k in debt. Pretty good deal.

  59. Anonymous

    I have to disagree with LivingAlmostLarge. Before we started our Total Money Makeover, there’s no way we could have saved 15% of our income…it was all going to car payments and credit cards! Once we got those out of the way, and saved up our EF, we’re able to easily put back 15% and still save up enough to pay cash for our next vehicle. How long did it take to make this turnaround?….3 years total.

    When working Dave’s plan, you want to get to baby step 4 as quickly as possible. He tells you in his book and on his radio show not to stop contributing towards retirement if you’re not going to attack this plan with gazelle intensity.

    I think Dave puts it best when he says “I like the way I’ve built wealth better than the way you haven’t.” Good enough for me…I’ll follow Dave’s plan since it was clearly much better than mine.

  60. Anonymous

    you need little victories psychologically to keep going. The biggest part about getting out of debt is seeing that you are obtaining your goal of getting out of debt. It may take longer from mathetmatical point of view, but when you are in debt you put alot of pressure on yourself as well see this enormous wall to scale without any ropes or ladders. also, although ramsey’s approach doesn’t make financial sense in terms of overall savings, it makes sense in that the end game is the same. Personally, I think it is bad to rush into paying off all your debt early. You need to have a safety cushion, because you probably cannot get more credit and if you need money, then you will have screwed yourself by paying off too early. Debt payment must be budgeted for.

    if you are going to do the opposite and pay off higher interest debt first, you need to be able to visibly see progress. Otherwise, you will continually to think that you will never get out of the debt, because you will continue to see the debt as one big debt rather than seperate debt.

    when i was in debt, i chose to pay off the higher interest first; however, i used an excel spreadsheet to track each creditor and the monthly reduction in debt. It showed me when I was going to pay off each creditor, and when I could switch payments to another creditor. It gave me definable goals and a method for tracking progress.

  61. Anonymous

    He also is a great seller. He sells all this materials to people in debt to get out of debt.

    But besides that I think that a lot of people who follow him are sheep. They don’t bother ever calculating anything such as is 15% in BS 4 enough? I don’t think so when you are 40 with little saved and just getting out of debt. He gives very little guidance or structure after the BS1-2, even BS3. He puts it ahead of BS4, which in some cases is wrong.

    He should probably get people comfortable on saving 15% minimally then build a EF. This will force them to be gazelle because of the small baby EF, and not lose more time (ie 1-2 years) building up a Fully Funded Emergency Fund before even starting on 15% retirement.

  62. Anonymous

    I can certainly understand the reasoning behind both methods. With that said, perhaps some middle ground exists. I would suggest that smaller debts (say under $500) should be paid off first regardless of which method one prefers. This way, one gets rid of the small debts first (the ones that may require low monthly payments but have a higher interest rate) as well as build some momentum by getting rid of a couple of debts early on in the repayment process. After these sub-$500 debts are out of the way, one could either continue on following Ramsey’s method or switch over to tackling the debts with the highest interest rate next.

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