His argument is that the psychological/motivational effects of paying something, anything, off outweighs any technical benefit you get from mathmatically lower payments.

I've heard this argument, but I'm not sure it works for the position we're currently in. To me, it's more motivating to have a loan, and to know that if we keep making our monthly payments it'll be gone on a certain date, and that right now we can start putting money aside to have an emergency fund. It makes all kinds of things I'd like to do, like have another child, buy a house, take my Summer 2015 European Dream Vacation, and not die starving and alone surrounded by cats, seem like actual possibilities, and that I won't spend the rest of my life being punished for the mistakes of the past 5-6 years.

ETA IMHO it's the sheer open-endedness of the credit cards that both gets us into trouble (because there's always room to put one more little thing on them) and makes it seems like it's impossible to ever get free of them.

Well, his is a pretty extreme I-want-to-get-out-of-debt-now method. You have to be pretty hard-core, i.e., with a written beans-and-rice budget. The stories I hear about how much people are able to pay off with this method are truly inspiring though.

Once you set up the first baby $1000 emergency fund, everything goes toward debt. Anything you have in the bank above $1000 should go to the debt. You shouldn't save or even do any retirement funding until you are completely out of debt (except for the house).

I'm being pretty good about the budget, but I still can't bring myself to give up the extra little cushion I have saved. And I can't bear to not get at least the 401K match so I'm doing that.

Not getting a 401K match is like giving away free money.

I admire the hard core dedication it takes to get out of debt but I just don't have it. We always have some debt floating around besides the house and a car payment. I just try to not let it build up to worrisome levels.

Wow. It's really nice to live in a place where, if the forecast calls for 6" of snow, people aren't running around like chickens fighting over the last loaf of bread and roll of toilet paper in the store.

Yeah, it sounds like just a different approach, and probably not the one for where we are in our lives right now. I mean, one thing I find kinda freeing about the idea of a loan with set payments is that we *would* be free to save for other things, go to baseball games, buy books, etc. as long as we could pay cash for them.

And I can't bear to not get at least the 401K match

Not getting the 401K match is throwing away free money.

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Not getting the 401K match is throwing away free money.

I agree, believe me, hence why I am only semi-following his system.

But I think that for the majority of people that he deals with, it is much more important to break the spending cycle by getting entirely out of debt.

For too many people, if you have any debt at all, it's just incentive to add more.

He's also against all credit cards.

The other thing I like about the idea of a loan, assuming a credit union approves us and all, is I feel like it would help me forgive myself for getting into this mess in the first place. I've gone through cycles of self-loathing over this that you wouldn't believe, but I feel like if I could just get the debt off the credit cards and onto a loan with a fixed term, I'd feel like, to put it in theological terms, that my penance had been set and I could just pay it all off and then go and sin no more. And by being able to build up a few thousand in a safety cushion, we wouldn't be in the position where every time something breaks we have to drive the debt higher, because we'd have cash on hand for new tires or to replace the laptop or what have you. I just hope it works and we can get the loan, because, to continue the theological analogies, I'd feel like I'd gone from Hell to Purgatory. And Purgatory is OK because it has an end date.

Susan, can you or are you willing to cancel the cards (or all but one) once you get the loan? We did what you are suggesting and, as people have said, by the time the loan was paid off, we were back where we had started in credit card debt.

Our current method, which is working much better, is that I take $1000 from my pay check every month, stick it in a separate account, and when Joe gets paid again (our big check), I send it to the card with the smallest balance. I like the fact that I can see the balance shrink each month and we are now down to the last card. (Of course, when the baby comes, that will be the end of that.)

The other thing I like about the idea of a loan, assuming a credit union approves us and all, is I feel like it would help me forgive myself for getting into this mess in the first place.

I sorry you feel that you need forgiveness. You have not done anything wrong!! So many people have gone through this.

I hate to be all "Dave Ramsey likes carrots", but this is really why I am still listening to this man, despite his conservatism, his christianity, and extremism. He has been there, and does not blame people for getting where they are. He certainly doesn't coddle, and tells it like it is, but doesn't make people feel bad for past actions.

Well, that, and people's get-out-of-debt-stories are truly motivating.

Susan, can you or are you willing to cancel the cards (or all but one) once you get the loan?

Definitely, though the counselor said it would be better for our credit rating not to cancel all of them as long as we had the discipline to either not use them or to only use them for small amounts and pay them off every month. Which I honestly believe we can do. The huge amount of debt ran up when DH was unemployed in '01 and then when I didn't work for a year and a half in '04 and '05 after AB was born. Most of what's gone on the cards since then has been emergency expenditures. We've learned self-discipline and proved it--now we just want to set up a plan that gives the debt an end-date so it doesn't feel like it's reigning over our lives.