Nearly every financial adviser — from accountants to brokers to books — advises that debts should be paid off in a particular order: from highest interest rate to lowest interest rate. While this method makes sense from a mathematical point of view, it makes less sense from a psychological point of view.

Assume a typical young woman in her mid-twenties who awakes one morning to realize that she’s in debt and who decides to do something about it. She might be burdened with the following hypothetical liabilities:

  • $20,000 college loan at 5%
  • $8,000 credit card balance at 12%
  • $2,000 computer loan at 10%
  • $3,000 car loan at 4%

Most financial gurus would advise that the debts be paid off in the following order:

  • $8,000 credit card balance at 12%
  • $2,000 computer loan at 10%
  • $20,000 college loan at 5%
  • $3,000 car loan at 4%

This payoff plan does, indeed, make the most financial sense if you have the discipline to adhere to it. By paying off the high interest rate debt first, you’re minimizing the total you will eventually pay in interest. But this method does not work for everyone.

I struggled with debt for a decade. I made several abortive attempts to eliminate my debt using the highest-to-lowest method, and each time I failed. Why? Because my highest interest rate debt was also my debt with the highest balance. Psychologically, I felt defeated; I could pay on this debt for months at a time and never seem like I was making progress.

I found a better way.

In his book The Total Money Makeover, Dave Ramsey advocates the Debt Snowball approach to debt elimination. Using the Debt Snowball method, you ignore interest rates when determining the order in which you’ll pay off your debts. Instead, you organize them from smallest balance to largest balance:

  • $2,000 computer loan at 10%
  • $3,000 car loan at 4%
  • $8,000 credit card balance at 12%
  • $20,000 college loan at 5%

After you’ve listed your debts from smallest to largest, pay the minimum amount on all of them except the smallest. Throw every dollar you can scrimp and save against your smallest debt until it has been eliminated, then move on to the next-smallest debt.

Ramsey advocates this method because of the subtle psychological reenforcement it provides. It’s “behavior modification over math”, he claims. And he’s right. The most important thing in paying off your debts is to pay off your debts; the order in which you do so is ultimately irrelevant.

The Debt Snowball method has vocal detractors who complain that the math doesn’t make sense. And it’s true that if you use this method, you will pay more in the long-run than if you had the discipline to pay off your debts from highest interest rate to lowest interest rate. But, again, what’s important is to just get the debts paid off. Know yourself. Choose the method that makes the most sense for you and for your situation.