Paying off debt is behavioral
If paying off debt was only based on the math then we wouldn’t have any problem convincing others to eliminate it in the most efficient way possible – highest interest rate debt first. The more you pay down, the less interest you will pay over time. That is why most people promote the “Debt Avalanche” process – it pays off the debt quicker.
The problem is that we humans like shiny new things, spoiling ourselves, and are starving for instant gratification. Paying off debt does none of that so we often quit before we are finished.
The Debt Snowball process
By paying the smallest balance debts first we are able to feel the “quick win” and are encouraged to keep going. Like a child doing their math homework, getting the first answer right will often give them encouragement to work on the second answer. With the debt snowball, the easier answers are the first questions on the math quiz and they become progressively more difficult down the page.
For an example on the differences between the Debt Snowball and a Debt Avalanche approach see this post: Highest Interest or Smallest Balance
Have fun with debt
ReadyForZero gives us a way to stay energized during the long drawn-out process of paying higher interest debt before knocking out the easy ones – and that is the key! If a tool can help you stay focused and encourage you to finish, then you will pay attention then you will pay less interest. It offers a fun way to play with your debts and it’s free! Sign up for a free account at ReadyForZero.com, import your debt information, and start paying attention to how much debt you are paying off!