This reader story comes from long-time reader and commenter Bill McFadin, aka Cybergeezer, who commented that he had submitted a story months ago that never ran. We asked if he would resubmit the article, which he kindly did — and then he submitted another one! Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.
I maintain that the best way for you to pay off your debts may be just a matter of your personality. My own experience with getting out of debt goes back about 25 years. I didn't get a particularly early start; I'm 68 now and attacked my debt in my early 40s.
There was precious little being written on the subject back then.
There was no Suze Orman, no Dave Ramsey — at least, I didn't know about them — and there was no GRS because there was barely an Internet, much less any personal finance blogs. It was just me and a mountain of credit card debt.
Unlike so many today, I was fortunate not to have student debt from college. In the 1960s when I went to college, I didn't even know anyone who had taken out loans for school. Or if they did, they didn't talk about it with their friends.
No, my debt at the time was all credit card, courtesy of two ex-wives and some over-zealous spending of my own. I looked at it like losing weight. I wanted to lose the weight of my debt. And that's when and how I decided that success with losing debt is just like success (or failure) with reaching any other long-term goal, like losing weight.
Never needed to lose weight? You may have had some other goal in your past that will tell you what your “debt-paying personality” is. Maybe it was quitting smoking or some other long-term goal. Whatever, I encourage you to look back at how you did it.
Competing debt-paying personalities
I have nothing against people like Suze and Dave, except for their insistence that their way is the only one that will work and the only one you should consider.
Suze, and what seems (to me, at least) to be the majority of those writing and talking on the subject, will tell you the only way to success is to attack your highest-interest-rate debts first. It makes sense because those debts are the ones that cost you the most in useless interest. (And, frankly, if you don't think interest on debt is useless, you're probably a creditor and not a debtor.)
Dave calls his method the “debt snowball” and it involves paying off the lowest-balance debts first. His method also makes sense because you see each debt disappearing more quickly. And there's no feeling like that of seeing an account that's paid in full with a zero balance.
Of course, in either case, when you have the first bill paid off, you put that new extra money toward the next debt in the sequence and so on.
But think back to that earlier goal and how you attacked it.
Are you the kind of person who likes to see some immediate success as a spur to keep going? Did you lose two pounds the first week or go without a cigarette for a half-day, then a full day?
Or were you able to keep your eye on the eventual goal and keep on keeping on, regardless of the inevitable setbacks?
Let your personality support your goals
My theory, and what I applied to my own debt, is that your personality in attacking other problems or reaching other goals will determine your own personal and best method of eliminating debt.
That need to see immediate gains toward your goal is well-served by using Dave's “debt snowball” idea. If that describes your way of getting to a goal, this may be your way to debt relief. Sure, the interest will continue to pile up, but you'll also have that great feeling of seeing bills paid being off.
But if you're the kind of person who can stick to the program regardless of how slowly it starts, you might be a candidate for paying off the highest interest first. You won't see the quick results; but you'll have the satisfaction of knowing you are making slow, steady progress toward the debt-free life. And, importantly with this method, you'll be paying less overall in interest.
What worked for me?
I realized that, although I hadn't been all that successful at the weight-loss effort, I did feel motivated by even tiny early successes. I knew that in other things in my life, I had stuck with it when I saw immediate results.
The point of all this psycho-rambling is simple: There is no one-style-fits-all approach to killing debt. What works best for you may not be what works best for your friend, neighbor or co-worker. And your own failure to kill the debt might just be linked to who you are and what your goal-reaching personality is.
But it doesn't matter if the job gets done, right?