Karen had $47,000 in debt and was drowning.
Credit cards, line of credit, car loan - the 48-year-old nurse from Edmonton was making minimum payments and getting nowhere.
Her financial advisor said, "Pay the highest interest rate first." Logical advice. Wrong advice.
Karen tried the mathematically optimal approach and failed for 18 months.
AND despite dutifully attacking her 19.9% credit card first, she felt like she was running on a treadmill - lots of effort, no visible progress.
BUT when Karen switched to the debt snowball method, she paid off everything in 14 months instead of the projected 24.
THEREFORE, Karen learned that personal finance is more personal than finance.
Why the "smart" approach failed:
Debt Avalanche Method (Highest Interest First):
Credit card: $8,500 at 19.9%
Line of credit: $23,000 at 8.5%
Car loan: $15,500 at 6.2%
Mathematically optimal
Psychologically brutal
Karen's problem: The credit card took 8 months to pay off—no quick wins. No momentum. Easy to quit.
The Debt Snowball Method:
Car loan: $15,500 (smallest balance)
Credit card: $8,500 (next smallest)
Line of credit: $23,000 (largest)
Mathematically suboptimal
Psychologically powerful
Karen's transformation:
Month 3: Car loan GONE (first victory)
Month 7: Credit card GONE (momentum building)
Month 14: Line of credit GONE (debt-free!)
The psychology of winning:
Quick wins build confidence
Momentum creates motivation
Fewer payments = less complexity
Success breeds success
Karen's results:
Debt avalanche projection: 24 months
Debt snowball actual: 14 months
Extra interest paid: $340
Time saved: 10 months
Psychological benefit: Priceless
Karen's breakthrough: "I tried to be logical for 18 months and got nowhere. When I focused on quick wins instead of perfect math, everything changed. The $340 in extra interest was the best money I ever spent."
When to use debt snowball:
Multiple debts are causing overwhelm
History of failed debt payoff attempts
Need psychological momentum
Interest rates are relatively similar
When to use debt avalanche:
Highly disciplined personality
Large interest rate differences
Purely mathematical mindset
Single large high-interest debt
The lesson: The best debt payoff method is the one you'll actually complete.
Karen's now debt-free and saving $1,200/month toward early retirement.
Sometimes being psychologically right beats being mathematically correct.
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