| Message |
When I posted, I worried that someone would point out that APR is an annual percentage, but since I hold tt.net to higher standards, I figured anybody on here could figure out that such an example could be extrapolated to create other such situations and I simply used a basic one because I can't do those more complicated calculations in my head... but as I was driving around, I worried that I could be wrong. lol However, my point stands even if my quick example doesn't. It is possible that a person's available funds cannot cover the interest incurred on one account simply because they put money toward the other. If the balance on one account is so large compared to the balance on one with a larger interest rate (which you say you should pay off first), it can easily pass the threshold where this occurs if you don't pay attention to it. Yes, either way you go, in my example the overall debt will increase with such a low monthly payment to such debt, but there are instances where one method will result in total repayment while the other won't, and vice-versa. (I thought that, in my example, the lower account wouldn't reach $150/month in interest before the larger account was paid off, but oh well... with a little more work, which I'm too lazy to do right now, I could find a different one that does work.) It's just a matter of which method prevents you from getting to a point where monthly interest overcomes your monthly payment capabilities, and that's what financial analysts and consultants can do. I never said the debt snowball was the absolute best method, I simply pointed out that it has merit... as do other methods. But in the end, financial data is too specific to individuals for anyone to say a single broad method is the answer for everyone - it's not. I'm an advocate of everyone doing the math and figuring out the best answer for themselves.
"When you say this, will you be surprised if your arguments seem to move about instead of staying put? And will you accuse me of being Daedalus who makes them move, though you are yourself much more skillful than Daedalus and make them go around in a circle? Or do you not realize that our argument has moved around and come again to the same place? [...] Or do you not remember?" - Socrates |
 |
