The Best Debt Dumping Approach

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The Best Debt Dumping Approach
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The proverbial fence sitter is back folks! I’m doing a little research for my upcoming book (yes, you are the first to hear it straight from the source – more on that soon) about the best approach to dumping debt.

Everyone has an opinion – and so do I. The best approach is the one the works best for YOU! Can I be anymore noncommittal?

I should have come of age in the 70’s.

When it comes to dumping debt, I’m all about peace, love and harmony – i.e. doing what works for you.


There are generally two completing approaches that bring the dukes out. You’re either team Debt Snowball or team Debt Avalanche (or neither – that is an option). I’m generally team Debt Snowball – only because it works for my brain. I am, however, flower-childy enough to admit that both have merits and that flower-childy is something I totally just made up.

Let’s take a peek.


Debt Snowball

This approach suggests that you:

  • List debts in order of smallest balance to largest and pay off the smallest one your list with all extra funds first before addressing the next debt. For more on this approach read Snowball Your Debt.
  • Ignore interest rates when arranging your debt list.
  • Leverage the mental boost gained by accomplishing quick wins as motivation to complete your debt dumping goal.

Simple enough? Maybe it’s too simple.


Debt Avalanche

Proponents of this perspective will remind you that:

  • Paying off debts with the highest interest rate first will save money.
  • Saving money is a good thing.
  • Dumping the higher interest rate balances can also reduce the overall length of your journey out of debt.


So which is better?

That depends on you. Are you seriously captivated by details? I know people like this. They have bad dreams and night sweats about paying more than is required. They’re good people. A little tightly wound, but good people. The avalanche might be a better approach.

If you’re like me and lose focus after long stretches with no excitement, then the debt snowball might be your thing. Load up some of those small bills, cross them off your list, and then poke out your chest a bit further because crossing things off your list quickly ROCKS!!!

A couple of Northwestern University researchers studied the two approaches. They found that people using the Debt Snowball method paid off more debt overall. If you’re on the fence, that might push you in one direction.

It’s important to do something other than engage in philosophical debates about which approach is better. Try one. If that doesn’t float your boat, try something else. Just don’t give up. Who knew flower children could be so persistent!

I will submit that a third approach exists – working within a community. I’m adding the finishing touches to that argument now. Stay tuned…

What approach are/will/did you use?

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