Putting all your payments into savings until you have enough to lump-sum a debt: you’ve got to be joking.

Were you kidding when you wrote that you were bothered by ‘a holier than thou tone’ in the posting?!

That seems to be the only way the Ramsey-ites function, which is a major turn off to using his approach ‘religiously’.

The post was fine and offered a nice alternative to some other choices. Maybe it’ll work better for some people, maybe strict adherence to the TMM is better for others. However, I don’t think it’s up to you to decide for others. When the DR crazies start going on about how his method is perfection and they ONLY way to go, I get genuinely icked out. I’m super happy it worked for you. I think his plan is best for people who are a bit older and haven’t made the right choices or have had things work out badly for them. For me who hasn’t been aimless in my choices or complacent in my finances, not so much and I’m happy to see this article providing yet another PERSONAL finance option and food for thought.

I was taken back by the relative negativity of this article telling DR fans that they are wrong. Mathematically you are correct, but as Dave said if it was all about math we wouldn’t be in debt to begin with. I think you minimized the psychological benefits to the snowball method.

On another note, I was somewhat upset in considering I have a plan that works why pick on it. Pick on those without a plan.

I’m assuming at this point in time (after following the snowball plan for over a year) I’d be able to successfully use your plan. But I tried this very thing before starting the Ramsey plan and failed at it repeatedly, my will power, knowledge and straight mathematics didn’t help me. It was only when I found the Ramsey plan that I was able to build an emergency fund and defeat debt. When I was drowning I needed those quick wins to keep me motivated.

Overall point, do what you need to do to succeed. I don’t know if Trent meant the article the way I took it, it just seemed to be written in a holier than thou tone.

I will continue reading this blog because it is filled with valuable information and ideas. I just wanted to state my opinion.

It’s hard seeing my savings account balances come close to our debt amount, since it’s almost tempting to want to clear that, but I’d rather have the peace of mind in the savings.

DR Fan — you must be new to this blog. Trent has paid off a lot, and I recall reading quite some time ago that he uses this save up then pay off a big chunk method. It clearly works for him.

For example, if you have credit cards, auto loans, and personal loans, then using the Ramsey method is probably best because those are “bad” debts and need to be taken care of immediately.

However, if you only have a mortgage or student loans, I can see the logic in building the six month emergency fund first.

Thus far using DR plan I’ve paid off $15,000 and have prevented thousands of other dollars of debt by having my baby emergency fund to help where I’d previously use credit.

Those of use with reasonable mortgage or car loan rates are already triaging our cash between retirement, savings, and debt service.

Now, we can handle this – I’ve handled far worse, so I know we can get through this. But the temptation to use our savings, as you’ve noted, is a big one.

So here’s my idea: Our goal is to have at least 6-9 months of living expenses in an emergency fund, but we don’t want it sitting there so easy to get at. So the idea is to take 3 months worth and put it in a money-market account at a local bank and disable on-line access and check/debit card access – if we need the money, we’ll have to physically go there during banking hours and withdraw/transfer funds. The remainder gets put into CDs – 3 months expenses in a 90-day CD, another 3 months’ worth in a 6-month CD, etc. So we always know we have enough money -if we can just get to the bank- to last us 3 months, and when that 3 months is up, there will be another three month’s worth waiting. And should we be blessed with no disasters during those three months, we simply continue to roll the funds over into new CDs.

Does this make sense? I would appreciate your comments. Please keep in mind, I have not actually shopped CD rates or anything – and the idea is not so much to be making piles of interest as to make the money hard to get but not THAT hard.

There are a couple of things that might not allow this to work for some. First, the temptation to use it for something other than debt would be huge. Then you have the issue of continuing to pay interest on your other debts.

In my opinion if you have several months of savings in the bank there is no reason to do this. I do not have a lot of income saved (only $1000 for my emergency fund) so, for someone like me it might be a good idea. However with the temptation to spend…. I just don’t know.

I think when you aren’t doing the 9-5, you need a bigger cushion in case something bad happens. I’m lucky my interest rates are low, otherwise I would probably be throwing more money at the loans than I am. Good post.