If nerds ruled the world, we’d only pay down the highest interest rate debt until it was at zero, and then move on to the next highest interest rate, and so forth. There continues to be a debate about whether or not the “snowball method” of paying down debt by paying off the smallest debt first as espoused by Dave Ramsey is practically superior to the mathematical approach of paying off the highest interest rate debt set forth by mathematics.Debt account aversion is the fancy psychologist Ph D term for Ramsey’s snowball method – we want to close as many One of the tests that the team conducted, though, showed students the total amount of interest that was being run up by each credit card. I turned red and immediately whipped out the backup card, the USAA card, to pay for whatever wasteful thing I was buying. It took a much more seminal moment many years down the road before I had the “this is friggin’ insane! That was the flashback I had when I read the last caveat on the findings of the study by Ariely’s team – that they did not measure subsequent purchasing behavior once a debt was eliminated.By using this reframing, the testers were able to shift the students’ behavior, albeit not perfectly, toward paying down the higher interest rate card rather than doing the snowball method. This rang a bell back in the buried depths of my memory. I flew the girlfriend into hopping, centrally-located Fort Knox. Suddenly (at least to me), one day, the card got declined. Even though the USAA credit card had, by far, the lower interest rate, meaning that if I was hell-bent on going on some sort of spending bender (like I was), I should have at least maxed out the USAA card first, I considered it to be the “officer’s card,”—back then, USAA was only available to military officers—and officers didn’t act that way. Sure, ideally, people would close those accounts, never to look back, and continue to march forward to the next goal, inching ever closer to debt free status.I chose to do so, but I also was caught in a cycle of consumption which was very difficult to break.
Maybe paying the highest interest rate card doesn’t work.
Usually, the excuse is that the environment or the atmosphere suddenly sparks this undeniable urge to go light up a cancer stick and send a lung dart down the smoker’s throat.
That’s called a conditioned stimulus (a la Pavlov), and it’s pretty easy to create conditioned stimuli for your addictions.
” (and yes, that music which plays after the end of the scream is an earworm in my head right now), has helped his listeners and readers pay off about a gazillion dollars of debt.
If I sound bitter, it’s because his call screener never called me back on those Fridays when I was ready to issue my debt-free bellow. I actually don’t know the numbers, but he’s guided a ton of people through the process and done a world of good.
There are times when, though I would not advocate it, I can understand how someone would get into credit card debt, such as a job loss or a sudden medical emergency for which the person was unprepared, and that person’s history showed responsible credit card usage previously (though, I still stand by the notion that there is no such thing as “good debt.”). That person made a choice and will make a choice to get rid of the debt as soon as possible.