I nerded out yesterday, after I read a blog ("The Debt Spiral" - Frugal Fan) on the different methods of paying off debt. After reading the article I was inspired to work through the example in Excel he gave in his article. During the process, I realized the author hadn't considered minimum payments that we being paid while "person 1" was aggressively paying down the first debt on the list. The methods he proposed made sense to me besides that mistake in reasoning. With that in mind, I decided to clean up his methodology and in the process experimented with some other methods to pay down debt.
What you're looking at are the results of the experiment using a simple example of "person 1's" list of debts, interest rates, and minimum payments. I used total interest paid and the total time it would take to completely pay down the debt to evaluate the efficacy of the methods. Not surprisingly Dave Ramsey's debt snowball produced the best results and a close second was using a ratio of minimum payments to total debt to rank which order to pay down your debts. In terms of the whatever method you used to pay down your debts the time frames didn't make much of difference but by a couple of months here and there.
The most disconcerting result was how "the debt avalanche", in which you pay down the debt with the biggest interest rate first, was one of the worst results of the methods considered. It may be a function of the number's I used but I feel with more scenarios and different numbers I don't think that result would change, but it remains to be seen.
I have no qualms about sharing my methods because it's not mine to keep, and you'd like me to send you how I did it, shoot me a DM. And if you want to see how long it'd take to pay down all your debts and how much interest you'll end up please don't hesitate, again just DM and we'll go from there.
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