As many of my frequent readers know, I am a computer geek. Not exactly 'leet haxor' level, mind you, but a geek nontheless.
Combine these techno-tendencies with my frugal nature, and POOF: you get a spreadsheet that let's you analyze snowball scenarios!
What the foo, you say?
Snowball: we all know this one, when you pay off one debt with extra income, then when that debt is gone roll the extra income and the previous debt payment onto the next debt. Payments snowball from one debt to the next.
Scenario: which debt do you pay first? How do you know which order of payment will meet your particular debt goals?
As I don't have any purchased financial software, I decided to create my own. It has space for 7 debts, which is what I'm dealing with when I count my house. You enter the debt name, regular monthly payment, current balance, and your APY divided by 12. Also enter the 'extra' money you anticipate having in an average month to 'throw' at debt. Then decide which order you want to try paying the debts in. It calculates monthly payments for all 7 debts (amortization style), adds up what all the payments are for all the debts, and compares that to what the raw balance is on the debt. By looking at the payment schedule, you can see when you would be debt free in total, and when each debt would be paid off.
See, I am a dork! 
At first I included my house when running my snowballs, and am pleased to know I could actually have everything paid off in 6.5 years. WOOHOO!! But, since we are planning on refinancing the house next fall and we don't know how long we're going to stay here, I decided to take it out of my calculations. Anyways, a house is good debt, right?
So what did I find?
Well, there's only a 1 month and $600 difference between my best and worst snowball scenarios. This makes me feel better, because if I chose to not snowball 'by the numbers', I won't actually be loosing too much. For all debt other than the house, we're looking at 2.75 years assuming I keep the same monthly extra amount of $550.
Interstingly, if I only pay $500 extra per month (stashing $1650 over 33 months)it'll only cost $200 more in interst on my best scenario and add 1 month to my timeline. But I digress...
Which scenario was the most expensive? The traditional snowball: paying the lowest balances off first. I didn't expect it to be the best of the bunch, but I didn't figure dead last.
Paying off highest balances, highest interest rates, and highest monthly payments first also weren't number one. This was a surprise!
The best snowball is a bit random, but math is math I supposed.
Snowball Scenarios
December 15th, 2006 at 04:16 pm
December 15th, 2006 at 04:41 pm 1166200889
How strange that both the high to low and the low to high arent the best idea. Weird!
December 15th, 2006 at 04:44 pm 1166201041
December 15th, 2006 at 06:34 pm 1166207699
You have accountant blood I tell you - LOL.
December 16th, 2006 at 03:14 am 1166238841
December 16th, 2006 at 02:59 pm 1166281140
Haxor or H4x0r (ASCII) - Hacker
need to note, though, that amoungst computer geeks a hacker isn't necessarily malicious, just someone exceptionally knowledgeable and comfortable with computers. you can be a 'white knight' hacker who finds weaknesses in websites/software/etc ad point them out to the companies in question in effort to help them better their systems.
or you can be like 2 ex boyfriends of mine, and hack your heart away till you get visited by government boys in suits