The face-off It’s a new year and a new you. If you’re carrying a credit-card balance or other unsecured debt, you may have decided that now is a good time to start the journey toward becoming debt-free.The... Hello and welcome to Financial Face-off, a MarketWatch column that helps you weigh financial decisions. Our columnist will give her verdict. Tell us whether you think she’s right in the comments. We want to hear from you.
To make matters worse, credit-card debt is more expensive than ever. The average annual percentage rate on a credit card recently hit 19.85%, an all-time high, Bankrate says. My reasons In choosing the snowball method, I’m thinking of people whose debt has put them into a dark hole that they can’t see out of. By providing early wins and the sense of accomplishment that comes from crossing a debt off the list, the debt snowball shines a ray of light that can guide people to freedom from debt.
Cruze has noticed that people who call into her dad’s show don’t mention math formulas when they describe the process of paying off their debt. Their language is emotional and describes feelings like anger. “They say, ‘We got mad, we were sick and tired, and we were going after it. As those smallest [debts] get knocked off, you get madder and madder, probably until the student loan, which is usually the last one because it’s usually the highest for people,” she said. “It’s powerful and it works.
The avalanche strategy directly attacks one of the “insidious” drivers of debt, which is the cost of money, and that in turn targets another core driver of debt: time, said Perry Wright, a senior behavioral researcher at Duke University’s Common Cents Lab, which partners with nonprofits, financial institutions, fintechs and other groups to study how consumers behave with their money in real-world situations.