I'm Having a Tough Time with the Math on This One!

Hello,

I'm not sure, but this question may be slightly off topic for this board. ???

O.k. Here goes... :-)

Lately, I've been seeing the following line used over and over again.

“Why paying off your high interest debts first can be the slowest way to get out of debt.”

Since this doesn’t seem possible, due to the interest rates, I created a spreadsheet on imaginary debts. I plugged in different time slots, paying the highest interest rates first, to actually see the amount of debt being paid off.

I then recreated the spreadsheet, using the exact same debts, interest rates, and time periods. This time, however, I “paid” the lowest interest rates first.

Now, unless I’m doing something wrong, the above information… “Why paying off your high interest debts first can be the slowest way to get out of debt” is incorrect.

Also, since there are so many different variables, the above statement seems to simplistic.

For example: what if one has a credit card debt of $5,000 at 24%. And, another credit card debt of $5,000 at 12%. While the individual is paying off the lowest interest rate card first, the highest interest rate card is eating them up alive.

The only way I can see paying off the lowest interest debts first is that doing so is for psychological reasons… at least one “thinks/ feels” they are getting out of debt faster because there are less total monthly bills being paid. ???

Are there any mathematicians or accountants out there that can help clear this up? Since I’m not an accountant, maybe I really am missing something here. ???

But, the math just doesn’t seem to match up to pay the lowest interest rates first.

Any ideas or thoughts on this?

Thanks in advance.

Cordially,
Diane Everroad




It Works! Only $5.95

Dianne ~

Don't know about the 'Math' part, but the headline's sole purpose is to attract one's attention and lead them into the body copy.

There are many instances of headlines going against "commone sense". This is due in part to the mind picking up on things which are out of the norm.

Case in point: Want to attract attention to a small display ad in the newspaper??? Have it placed upside-down!

As the eye's scan, the mind has been trained to "look over" many of the ads, unless something attracts it's attention. An upside-down peiecce of print WILL catch the eye. Then it is up to the ad copy to keep you interested enough to continue.

In a reverse case, many of the business magazines have seen an increase in full page ads duplicating the type, style, text, color and layout of the magazine itself. This is done to "disguise" the ad and make it appear as if it's an 'Editorial' or 'Article' within the magazine.

Again, a mind trick.

The famous "Man Sells Brooklyn Bridge" headline is another example. We think, "This cannot be!". So we continue to read and then possibly make a purchase. The headline has done it's main job of leading you into the body copy.

So even if the 'Math' doesn't work... It's still a very effective headline if it gets the reader to stop and take notice.

Success and Regards... Mike

http://www.CrashCourseMarketing.com
...the fastest growing eZine for Sales
Professionals and Internet Marketers...

Dianne -

> “Why paying off your high interest debts
> first can be the slowest way to get out of
> debt.”

Leo Quinn has built a complete information product around this concept. He even teaches it at several community colleges. He's done quite well with it. I have the information product and it looks good. And Leo is the real deal. I met him last year when Gordon arranged the "insider's tour" into SCI. We then had a cookout at my house afterwards for those who could attend. I got to chat with Leo for quite a bit during all of this.

You can check out Leo's info at www.leoquinn.com and I get nothing for referring you there. I just know Leo and I know his information is good.

Rick Smith, "The Net Guerrilla"




And Here's When You Can Check Out How to Get a Great New Life In 10 Days

Hi Diane:

-"Why paying off your high interest debts
first can be the slowest way to get out of
debt."

Is the second bullet point in my salesletter at

http://www.LeoQuinn.com/an.html

Someone is reading! Yippee!! :>)

I hope you didn't spend too much time on that spreadsheet because your math is probably correct.

What you are missing is the overall concept explained quite clearly in my e-book available at http://www.LeoQuinn.com/an.html

In a nutshell, it's not so much the interest rates that are important but what you do with extra money you put towards your debts and what you do AFTER a debt is paid off...do you take that money (which is now extra since you've paid the debt off) and waste it or do you put it on another debt?

One of the nice parts about being in this business is you get nice notes like the following I received a few weeks ago...

Hi Leo,

I am compelled to write you. Normally I just don't order off of the
Internet but your email caught my attention as I had just made a committment
to myself to "once and for all get out of debt."

I finally made the decision last night to purchase your e-book and I am just
ecstatic! I stayed up until 5am this morning reading and crunching numbers.
My $20K debt (credit card, personal and car loans) can be $0 in 1-1/5
years! Do you know how long I have had this credit card debt? 4-5 years!
What's interesting is looking back at statements of my perceived debt
reduction plan with the "pay a little more" theory on the high interest rate
cards. What a JOKE! I hadn't budged an inch overall in comparing year to
year. Up and down - thinking all this time I had made progress.

I cannot tell you how grateful I am to you. Your willingness to help and
heartfelt concern is evident all over your materials. Thank you for this
beautiful gift!

Sincerely,

Alexandra Z

***************

Feel free to write to me directly with any questions. Now go get out of debt!

Leo J. Quinn, Jr.

P.S. Rick, thanks for the mention.

> Hello,

> I'm not sure, but this question may be
> slightly off topic for this board. ???

> O.k. Here goes... :-)

> Lately, I've been seeing the following line
> used over and over again.

> “Why paying off your high interest debts
> first can be the slowest way to get out of
> debt.”

> Since this doesn’t seem possible, due to the
> interest rates, I created a spreadsheet on
> imaginary debts. I plugged in different time
> slots, paying the highest interest rates
> first, to actually see the amount of debt
> being paid off.

> I then recreated the spreadsheet, using the
> exact same debts, interest rates, and time
> periods. This time, however, I “paid” the
> lowest interest rates first.

> Now, unless I’m doing something wrong, the
> above information… “Why paying off your high
> interest debts first can be the slowest way
> to get out of debt” is incorrect.

> Also, since there are so many different
> variables, the above statement seems to
> simplistic.

> For example: what if one has a credit card
> debt of $5,000 at 24%. And, another credit
> card debt of $5,000 at 12%. While the
> individual is paying off the lowest interest
> rate card first, the highest interest rate
> card is eating them up alive.

> The only way I can see paying off the lowest
> interest debts first is that doing so is for
> psychological reasons… at least one “thinks/
> feels” they are getting out of debt faster
> because there are less total monthly bills
> being paid. ???

> Are there any mathematicians or accountants
> out there that can help clear this up? Since
> I’m not an accountant, maybe I really am
> missing something here. ???

> But, the math just doesn’t seem to match up
> to pay the lowest interest rates first.

> Any ideas or thoughts on this?

> Thanks in advance.

> Cordially,
> Diane Everroad




Did I mention this? :>)

Leo,

Do you still sell that info product on buying cheap hard copy info products? : >

(That doesn't quite sound right, but I think you know what I mean.)

Best Wishes,
Jim Erskine

Hello Leo,

Thank you, and the others, for taking your time to respond to my question.

"In a nutshell, it's not so much the interest rates that are important but what you do with extra money you put towards your debts and what you do AFTER a debt is paid off...do you take that money (which is now extra since you've paid the debt off) and waste it or do you put it on another debt? "

I agree... almost totally. :-)

"...it's not so much the interest rates that are important..."

With credit card interest rates now going as high as 35%, I think one needs to pay the highest rate cards/debts first.

"...what you do AFTER a debt is paid off...do you take that money (which is now extra since you've paid the debt off) and waste it or do you put it on another debt?"

Absolutely!!! This is one of the key factors of getting out of debt... and I'm not talking about in 30 years time! :-)

Again, thank you Leo.

Cordially,
Diane Everroad




It Works! Only $5.95