Tired of making payments on your debt without seeing much progress on the balance? If you are at peace knowing that your $200,000 home is REALLY going to cost $365,000 after 30 years of payments then move on. However, for those who seek financial independence, those that want to free up extra cash to LIVE LIFE, and for those who want to break free of the rat race then keep reading!

There are a couple strategies you can do, besides actually selling the asset, to eliminate the loan you carry around on your shoulders everyday.

The Debt Snowball

This method, which Dave Ramsey is a big advocate of, requires you to list all of your debt balances from smallest to largest. The idea is that you throw everything you can to that smallest balance and once that is eliminated you move on to the next smallest. Your available cash to put towards any debt essentially snowballs allowing you to apply more that just the minimum due.

I list this method first because even though it is not going to save you the most in terms of interest you’re paying, it has certainly shown to be the most effective with our need to see immediate progress.

By The Numbers

Another method is to list your debt balances from the highest interest rate to the lowest. This strategy requires you to pay extra on those balances with the highest interest rate while making minimum payments on everything else. Mathematically this will save you the most money in terms of interest paid over time, however most people have a hard time sticking with this method because they do not see that immediate progress! 

Your Decision

When deciding which method to pursue there is no right or wrong method. It really depends on your personality and which method you feel is going to work best for you. Logically you may want to pay off the highest interest rate first but emotionally you may give up. The best move is commit to changing our behavior. Just like dieting, eliminating debt requires you to make conscious decisions everyday to leave the unnecessary things out of your budget and apply what resources you do have to shed those extra pounds or balances in this case.  Here is a handy debt calculator that will allow you to see the difference between the two methods.

Just remember it takes time so set check-in dates, track your progress, and celebrate milestones. When you feel defeated look back on your progress to remind yourself of how far you’ve come.  To read more about the psychology of paying off debts, take a look at this Bankrate.com article.


The rich rule over the poor, and the borrower is slave to the lender.” Proverbs 22:7