A better way to pay off debt

If you’re one of the millions of Americans carrying an average $15,000 in debt, you know just how frustrating and daunting it can be to pay off.

It’s easy to fall into the red, whether it’s from credit card bills, student loans or unforeseen medical expenses. And it seems every expert has the perfect 5, 7 or even 13-step plan to get you out of debt fast.

Also see: 3 Harmful Money Lies We Tell Ourselves

Most debt-reduction programs advise tackiling the highest interest rate account first. That’s solid advice, but it doesn’t take factor in how paying down that balance actually makes you feel.

The "debt snowball" method focuses on paying the smallest debt first, then the next and the next, until it snowballs until, eventually, your debt is gone. Paying off a small balance gives you a quick victory and the emotional motivation to keep going.

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Researchers at Northwestern University’s Kellogg School of Management found that people who attack their debt in this way are more likely to pay off everything—even if it takes years—than those who prioritize debt based on interest rates.

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For instance, if two clients both owed $10,000 among four accounts, a person who paid off two $1,000 accounts in a year was more successful overall than the person who paid off one $2,000 account in a year.

Also see: 3 Things Keeping You in Debt

Someone using this strategy for 12 months was 14% more likely to erase all debt, and after four years on the snowball method that same person was 43% more likely to eliminate all debt.

So, what’s the bottom line when it comes to improving yours? If you’re struggling with debt, consider giving yourself a boost by starting small.

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