The financial world we live in is just as wild, if not more, than the mountains and woods we walk through. We are told that the fundamentals of our economy are strong, but we can feel that something is wrong. My unique financial background and survival passion make Financial Survivalist and excellent place to learn and share.

Tuesday, October 15, 2013

Dave Ramsey Epic Success!

10:11 AM    No comments

I oft times criticize Ramsey for his one size fits all investing and get out of debt plan. The thing I have to give the guy credit for is his ability to help people get out of debt.

In his "snowball" approach, he recommends that consumers pay off the smallest debt first. Mathematically, it is best to pay of the highest interest rate first. I have often thought that if you are disciplined enough to follow Dave's plan then you are disciplined enough to pay it off right. I AM WRONG. You see, I was considering the above average, not part of the herd, level of discipline. Dave is considering human nature and psychology.

As an economist, I cannot consider only the logical solution. That would lead me to Marxism and Socialism as the best solution. After considering human nature, we realize that Marxism fails. It is similar when considering how best to pay off debt for the herd. Dave's method has a better chance at success for the most amount of people, because it is designed for the herd. It is designed with human nature in mind, and the herd is a larger demographic.

Recently, a Time's article featured this conundrum. The article "The Verdict is in Tackle Smaller Debts First" vindicates Dave's method of paying off smaller debts first. Good for Dave, for standing up for what he believed in, and finally being vindicated by psychology. Touché.

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