This week’s Carnival of Personal Finance featured two articles whose titles alone, I confess, got me to click on their stories. The first title, The Hell With You Dave Ramsey! I’m Paying My Highest Interest Debt First! was no less shocking then Number One Frugality Tip: Don’t Be a Woman.
You: Are you for real?
A shocking title is more likely to be clicked on. The Dave Ramsey related article strikes a nerve with a lot of people.
You: What nerve is that?
Mr. Ramsey, who is thoroughly respected by the financial community and has an enormous fan base through his books and radio show, consistently tells his readers and listeners to pay their smallest debts first.
You: Why does that advice strike a nerve?
To some people, the guidance is at odds with sound financial logic.
Because, in debt management, the absolute best use of your finite money is to pay down the debt which charges the highest interest rates. Since the two (smallest debt and highest interest rate debt) are often not the same debts, Mr. Ramsey’s instruction is counter to pure financial calculations.
You: What do you think?
As I commented at the post,
Reasonable people can disagree.
For what it’s worth, I’m not with Dave Ramsey on this particular issue. I buy the importance of momentum and think seeing your success is an important part of continuing to achieve it. Still, I always teach people the correct habits right away. I don’t believe that “beginners” should start with the wrong habits solely for motivation/momentum’s sake.
The truth is, financially speaking, there is a right answer and that is to pay down your highest interest debt first. But, this isn’t strictly about finance.
People who go out of their way to listen to folks dispensing PF advice are already somewhat motivated. They are beginning to exit the denial stage. I say “Tell them the best way to do something.”
As far as that article about not being a woman, the author – not surprisingly – waters down his tone in the opening paragraph. Still, it’s a thought-provoking article, especially if you’re curious what others spend on beauty-related products and services.
Personally, I go to a barber and I’ve been told that it looks like I go to a barber.
You: I don’t think they meant that as a compliment.
Yeah, me neither. Yet somehow that doesn’t bother me. Your thoughts?
You: On my hair?
If necessary, but certainly other topics welcome.