Debt Snowball makes a lot more sense to me than the avalanche because psychologically I am getting something accomplished.  Even though I pay $1000 dollars off, I still think I have large debt.  Flexo is not making cents "O".  Nice try!!!!!

There are MANY suggested financial practices that "are mathematically correct"... That said....The American Public continues to NOT make the best and most correct choices.  The Dave Ramsey method is far more "usable" and creates a far more sustainable method.  Totally correct...or not... it works.  I'm a 20 year financial advisor and I understand the behavior of people.   Behavior is what creates wealth...not "correct mathematics".      In the end... YES, for your astute and disciplined readers.... your Avalanche is best.  If they are that disciplined and astute, they probably don't have a major debt issue.   For the rest of the world.... Find instant satisfaction, pay off your smallest... then with some success, maybe switch from a snow ball to the avalanche!

Hi, Flexo,

That pre-supposes the idea that you have enough money to pay everything including the minimum on each debt.  For some people, those newly laid off, or divorced, for example, paying even the minimum on some debts is going to be beyond their means.  When I went through that a few years ago, my focus was on paying our rent, the utilities, putting gas in the car (so I could get to my very low paying job), and if anything was left, I bought some food since I only got $93. in food stamps (I made too much money! according to the food stamp people).  Then and only then did I pay any of my bills.  Very stressful and lowering for me since I'd always prided myself in paying all my bills early and more than the minimum!

This is really a good idea, but I also understand the appeal of the "Snowball" method. So I have split my focus. I am paying the highest interest card and the lowest balance card (oddly, they are not the same card... imagine that!) This has provided me with the dual satisfaction of seeing those much loved $0 balances start to appear, and get rid of my one 30%+ card. So not only do I feel a sense of accomplishment logically, everytime I login to my software, I get the immediate gratification of seeing those $0s.

I am a fan of the debt snowball program. The Avalanche in theory also works but for the majority of people, the Debt snowball is the bast plan to really payoff their debt with satisfaction. The difference in interest paid between the two is insignificant if a person is really focussed on paying off their debt in most cases. I am a debt counselor in MO so this is what I experience with my clients.

I agree with Flexo. Instant gratification and credit card payments should not be put in the same group. Instant gratification is what got most people into their financial mess in the first place, and it will not retrain you to spend more wisely!

I'm not sure this has to be considered some sort of novel program, paying off higher interest rates first just makes sense.  Or you can try to take the money you would use to pay off your credit cards and invest it to try to make a higher percent on your investment than your credit card is charging. ...Um, bad idea.  I talk about this in an article where I have some very smart but really dumb friends doing this.  See the details:

www.thegearedinvestor.com/pay_off_debt.shtml

I think it's ironic that many financial advisers are quick to point out that incurring credit card debt at 15% is ridiculous if you have savings sitting at 2%, but it's wise to pay off a $95 card at 5% when you may have a $2000 card at 25% because of the "psychological benefit."  Following the psychological benefit of retail therapy is often what got people into the debt mess, so I don't see any real change in pattern by neglecting financial common sense to do what feels best.

I get that there is a motivational necessity, so how about after they snowball the first card away and know it's possible to pay them off, the debt avalanche is paid.  Explain to them that only paying off their small balances regardless of interest rate is throwing money away and they could be debt free months sooner if they go by highest interest rate instead of lowest balance.  After the high of paying off the first card, the thought of being out of debt several months sooner could be the motivator to a real "psychological benefit."

The avalanche is just one method to pay off debt.

The debt snowball ala Dave Ramsey is ONE step in learning financial discipline.

What works for and motivates one person may be different than what works for and motivates someone else.  

Money, finances and debt are inextricably linked to human psychology (something politicians know and use to--successfully-- get votes)

The only "right" method to paying off debt is the one that results in debt elimination.

Rather than argue over the "correctness" of each method, why not congratulate those who do successfully pay down their debt regardless of the method used? THAT is an accomplishment in itself.

I'm sorry given human nature I have to agree with the Debt Snowball.  I read Dave Ramsay's book and have begun his baby steps to paying off debt.  I feel much better psychogically and more satisfied when I see that zero balance in the books.  Sorry I understand the logic but if I were completely logical in the first place I wouldn't have gotten myself into debt.  Step 1 admit the problem.  I have and the debt snowball works better.