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How To Get Out of Debt - Suze Orman Versus Dave Ramsey
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 Is your debt getting in the way of owning a home or getting a new car? If you search the Internet you will find many ways to get out of debt including debt settlement, debt negotiation, bankruptcy, continuing to make minimum payments, and just walking away from it all. Be careful what you choose as they each have impacts on your credit which will affect your ability to qualify for a new home or automobile.
Two solutions that have the most beneficial impact on your credit report and rating that have been tested over time by 1000's of people are one by Suze Orman and one by David Ramsey. I am presenting you with a very brief comparison of each method to give you a jump start on getting out of debt and getting what you want this year.
First, let us take a look at the method developed by Suze Orman that can be found in her book “The Road to Wealth”.
Action 1 – Your first action is to sit down and really look at what you can afford to pay each month towards your credit card balances. Said in another way, what is the most amount of money you can pay each month to pay off your debt?
Action 2 – The second action is to add ten dollars to each minimum monthly payment for each credit card that you have.
Action 3 – Next, add up all your minimum payments from Action 2 (minimum payment plus $10 for each card). and compare the figures you get from Action 1 and Action 2. If you are lucky the figure from Action 1 is larger than the figure in Action 2. If it is, apply the difference to the card with the highest interest rate. If it is not, you might want to look again at things you can do to save money in Action 1 to get this figure up.
Action 4 – Once the card is paid off, you will continue to do the Action steps 1-3 until all of your credit accounts are paid off.
Now let us take a look at the Dave Ramsey "Snowball Method" for paying of your credit cards.
Action 1 – Sit down and list your credit cards in order from the highest balance to the lowest balance. make sure you get these numbers from your credit card statements or your credit report. Your credit report should be able to give you an accurate detail of the money you owe and to whom you owe it to. It is also a good idea to at least check your credit report annually if not every 6 months to make sure it is reporting accurately and that you are not a victim of credit fraud or identity theft.
Action 2 – Starting with the credit card with the smallest balance, pay as much as you can on this card while paying minimum payments on the others.
Action 3 – Once the card with the smallest balance has been eliminated, carry over that payment towards the next credit card you have with the smallest balance.
Action 4 – Keep on rolling with this method until all of your credit cards are paid off in full. This method has also been referred to as the roll up method. The roll up method is a method that is also taught by John Cummata. He is also the author of "Transforming Debt into Wealth".
So the answer to the question of which method is best, in my opinion, is Dave Ramsey’s Snowball Method. It is awesome for boosting self esteem since it will give you a great feeling of accomplishment once you have paid a debt off. You can see them drop one by one. I also like the idea of taking money that was used to pay off a smaller debt and then apply it to the next smallest credit card.
One caution here no matter which method you use, do not close these accounts. If you close them before you are out of debt you could potentially hurt your credit scores as well as take away your "emergency" fund if you need one.
Suze Orman’s method from a mathematical standpoint makes the most sense since you are focusing on the credit card that is costing you the most in interest. I also like the idea that you are paying more than the minimum each month on everything. However, the progress on each account will be slower than on Ramsey's method. This method will also have a positive effect on your credit scores as you pay down the debt.
Which method is the winner? I have no idea; my point is to present you with two proven methods for paying off debt as soon as possible. The method that most appeals to you is the one you should pick. Next, and this is the most important, get started and stick with it. The sooner you start, the happier you will be.
Dave Mason has been in the mortgage and consumer finance business for over 10 years. He has a Finance and Real Estate degree from the University of Arizona.
This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
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