Dave Says: What’s the Reason for Smallest to Largest on the Debt Snowball?

by | Dec. 14, 2010


Dear Dave,

Why do you recommend paying off your debts from smallest to largest when doing the debt snowball?


Dear Mike,

This is a really good question! A lot of people wonder the very same thing when I bring up the subject of the debt snowball.

Many folks think paying off the debt with highest interest rate first is the best approach. This seems to make sense mathematically, but I realized a long time ago if those people could do math they wouldn’t be drowning in debt in the first place! Debt is not a mathematical problem, it’s a behavior problem. I’m convinced that personal finance is 80 percent behavior, and only 20 percent head knowledge.

The reason the debt snowball pays off debt from smallest to largest—even though it may be mathematically incorrect—is that modifying your behavior and inspiring your desire to get out of debt is more important than the math. Your probability of becoming wealthy has more to do with your behavior than your financial sophistication or academic pedigree. And besides, I’m a practical application kind of guy—not a theory guy. That’s why my way actually gets people out of debt when lots of other practices fail.

When you pay off a small debt it means you’ve experienced success, and that gives you hope. Then, you move on the next larger debt. When you pay that one off—and you’ve wiped out two debts—it really energizes you. At that point you start to believe in yourself and that you’re on the road to becoming debt-free!

— Dave

*For more financial advice, go to daveramsey.com.
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