some on here might say that's sub optimal lol!

Congratulations, or as Dave would say...."You're so weird!"

What percentage (ballpark) of your wealth is in your house, retirement accounts and other places?

Agreed on you giving up on TC. The prior poster nailed it, people who have shown a knack for being financially irresponsible don't need optimal results. What they need it simple so it makes sense to them so.....and here is the key point....they are comfortable with actually implementing a plan.

Implementing an action plan even though mathematically is not optimal is greater than being too intimidated to implement an optimal strategy while continuing on with their old habits.

I agree with everything you've said since my last post with the exception of the statement above. I also believe I have adequately defined and offered meaningful rebuttals to most, if not all, of your criticisms of the Ramsey plan.

You raise many good points on your side of the argument. And I wholeheartedly agree that his plan swings the pendulum from one extreme to the other. That said, I personally would rather be on the debt free, low risk side of things than the other. My preference and understandably not the preference of all.

Congrats.

And not to minimize your accomplishments, but people reading this thread should know that your story is a pretty standard one for people on the plan. His plan simply works. And while it can be argued how "optimal" it is, someone putting this plan into place in their 20s will likely have more money than they can ever spend by the time they retire.

150k House, 350k in retirement accounts and about 60k in the bank

Me and my wife make about 150k combined and I'm 40yrs old

The only thing I'd disagree with is I think most people that start the plan give up or fail. Yea it works if you stick to it but few do. I know several that started and quit. I was pretty good about not having debt anyway

My statement meant to infer those who live the plan long-term (e.g. forever), not those who do it for a xx years then quit. The plan is easy to comprehend; much harder to follow through on long-term.

Thanks...I really don't see a problem with your allocation. I asked because I was imagining something like your retirement account and house value switched...which doesn't seem smart, but your situation seems pretty good. (Obv you have a pretty high income so you'll be better off than most but I imagine you are in a much better spot than the average person in your income/age group)

Northwestern likes interesting studies apparently!

tl;dr: Snowball is superior for actually getting out of debt

http://www.kellogg.northwestern.edu/...-approach.aspx

The ‘snowball approach’ to debt
Kellogg researchers find that consumers who tackle small balances first are likelier to eliminate their overall debt
By Ray Boyer

8/7/2012 - Which account balances should consumers pay off first to reach their ultimate goal of being debt-free?

A team of Kellogg School researchers has found that people with large credit-card balances are more likely to pay down their entire debt if they focus first on paying off the cards with the smallest balances — even if that approach doesn’t make the best economic sense.

Credit card debt in the U.S. totals about $1 trillion, and U.S. residents, on average, each have five cards. So when cardholders don’t have enough money at bill-paying time to cover their entire debt, they have to choose the best strategy for paying it down over time.

The “rational” strategy is to pay off the cards with the highest rate of interest first, regardless of the amount owed on the card. This is the strategy recommended by the U.S. government, as it ultimately costs consumers less in interest.

However, an alternative approach advocated by some financial advisers is to pay off the small balances first and the big ones later. This “snowball approach” is believed to increase the likelihood of getting out of debt, as it keeps consumers motivated through “small victories.”

How they did it
Assistant professors of marketing David Gal and Blakeley B. McShane got to the heart of the question by obtaining access to a unique data set. Provided by a leading debt settlement company, it gave precise information as to how 6,000 people finally eliminated their credit-card debt. In their analysis, Gal and McShane found that consumers who pursued the “small victories” strategy were more likely to eliminate their entire debt balance.

Their findings appear in the August issue of the American Marketing Association’s Journal of Marketing Research.

“We found that closing debt accounts — Independent of the dollar balances of the closed accounts—predicted successful debt elimination at any point in the debt settlement program,” Gal says.

The authors say their research raises important policy questions. “Perhaps consumers should be told of both the rationally optimal approach to eliminate debt — that is, paying off higher-interest balances first — as well as the possible psychological benefits of closing account balances. Consumers can then make an informed decision,” McShane said.

Sort of like explaining the placebo effect to a patient and then giving them a placebo....

Do you think Warren Buffett has a mortgage on his house? It is worth about 500K, so why don't you send him a letter and tell him how dumb he is. He certainly could get a maximum mortgage at the lowest rate any human could get, and then simply invest the 500K in smaller cap companies and come out way ahead.

Do you people just fall out of trees? The world's greatest investor/ money manager in world history doesn't have a mortgage, but all of a sudden people like you are smarter than him. He paid 32K for his house in the 1950's, and never took a mortgage. Do you think he regrets that? No he does not.

You are a real piece of work.

Sort of like a really bad comparison.

A placebo would be to restructure the debt to get a better overall interest rate, yet still paying less on the debt than the interest alone...

This is a retarded argument. When your home represents such a negligible portion of your worth it doesn't matter. It is very different if your home represents a significant portion of your worth.

I'm sure that 500K he could take out would really make a huge difference to him. That is peanuts for him, why does he worry about that? I'm sure he has leaks that are enormous to peons but insignificant to him.

When he didn't have capital and he sunk it in a house, he of course made a foolish investment, since his RoR on his other investments were far greater than his 32K->500K over 60 years. If he would have invested that 32K in his other investments, he might have a few extra billion by now, instead of just 500K.

And yes, even Warren Buffet has leaks. Which is why you simply rely on arguing from authority rather than any actual sense.