What's The Fastest Way To Pay Off Debt?

Debt is one of our least favorite things to talk about, and that's one of the main reasons it is so hard to pay them off. BUT researchers have figured out how to rewire your brain to take on the debt monster.

Two Cents on Twitter: @twocentspbs

--

Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.

Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Andrew Matthews & Julia Lorenz-Olson
Produced by: Katie Graham & Amanda Fox
Images by: Shutterstock
Music by: APM

Works Cited:

[FLWVideosYT]

I got an undergraduate degree in Finance and reflecting has been so interesting. All of the classes I took just focused on the mathematical side and not the behavioral aspect :(

[lidarman]

This basically shows there is a monetary cost to mental weakness.

[C_HILL_OUT]

I used the snowball method and in 4 years paid off everything including my house. Feels really good knowing my home and vehicles are all mine and not some banks. Any debt collectors that may call me either have the wrong number or are looking for my ex wife.

[xxfearless]

You two have an awesome chemistry together, the comedy, visuals, sound, pace, and topics are on point! Only thing is you need to please make videos 10 times more frequently because I cant get enough! Keep up the great work! This channel will be huge in the near future!!!

[TomsTinkeringandAdventures]

I was a CFS (Command Financial Specialist) for the Navy for a while. We were taught to use the avalanche method (I think they called it Full Steam?) but I also would tell people to use the snowball type, because it does feel good to wipe out one of your creditors. Sometimes we would hybrid the system, pay off one small debt and then start on the highest interest one next. Whatever way you use, just keep paying them off!

[pierrejoseph]

In a perfect world, two cents would be what you'd watch on TV on a daily basis as it is very informative and life changing. Keep it up guys.

[danycashking]

Personally, avalanche works best for me, I'm a person with a very high wait threshold for rewards and I'm pragmatic, eliminating a small debt will only make me even more stressed out about the big one still waiting on me and about the timescale it will take to ultimately be done with it. Getting rid of my biggest weight first makes me feel relieved and confident that if I made it through the biggest one I'll be fine with the rest of them because I've made it over the biggest hurdle, it's all downhill from then on.

[brianthered]

Caught the plug for your show on another PBS youtube series. Gotta say I've now binge watched all your episodes. Great content. You both are great presenters. Love the format. I honestly have so many topics I'd like to see you two cover. Not for personal reasons, but as general "I wish this was told to me when I was in high school" type content. Issues I've seen with people that might make for good content. 1. Why attorneys don't represent tenants. 2. The various ways child support is calculated. 3. Paying off your house vs saving for your child's college fund. 4. How to dispute your credit report rating / general info about the big three. 5. Bankruptcy, myth and fact, and why it's so complicated you need an attorney. 5a. Secured, unsecured, and priority debt in bk. 5b. Different chapters. 5c. The aftermath, and how credit companies stalk clients with offers after filing. 6. Insurance, why most people have term life and will never use it, vs short term long term disability insurance. 7. History of money. Debt as money. 8. Retirement. Index funds.

[arasmith]

Can someone please forward this video to the U.S. Congress?

[RipenedKarma]

My mom has always been the type to use the snowball method and tried to push it onto me but after 10 years of trying to do it that way, my debts never changed. I switched to the avalanche method, saved all my cash tips until I reached the full student loan amount and paid it all off in a single day. I’m finally student loan debt free after saving for only 6 months.

[watchvids]

I love the whole production of this. Not only are they super pleasant to listen to and animations, like at 1:45 for the "Avalanche approach" extremely eye-opening (financial advisors should have those!), but the short video format is also perfect for this subject matter. It's not putting people off by being too dry, on the contrary, it makes you suddenly want to do something super savvy! :D

[MrEmoImo]

I hope everyone can watch this and get out of debt. Being in debt with no way out is the worst feeling in the world.

[LivingWithTheGuzmans]

The snowball effect has worked for us.

[aqueen]

I’m surprised you didn’t also mention the tsunami method of paying off debt. That is my preferred method, it works really well for me. It is basically listing the debt by what is the most pressing or stressful, no matter the rate or amount owed. I find that the emotional relief is just like what you explained for the snowball, but sometimes a bigger debt is more urgent and goes away faster than a small one, which can feel amazing!

[goodfellabeats]

I've gotten out of debt using the "payoff the high interest rate" approach. Highest interest rate usually has the highest monthly payments. Once I paid off the high interest rates I had a lot of extra money to throw at the other debts. I saved over $5, 000 on interest that I didn't pay. That was my dopamine rush. Math don't lie!

[rosastrohhut]

It really works! Paid off my credit card today, feeling awesome! Now it's the student loans that are being a giant monster to be managed! Thanks guys!

[MatthewBennettFPV]

Turns out I’m an emotionless robot. Avalanche method all the way!

[tennisplaya]

I loved how they touched on the psychological side of paying off debt. Another important factor psychologically is knowing why you want to pay off your debt so quickly. You have to have a reason why you are willing to make those temporary, but sometimes painful sacrifices to achieve the goal. Not only will that goal help you continue the course, but you maybe able to “sprint” faster because of it.

[villafontananorte]

I am expecting to be debt free by April.
I work to be free and enjoy my money, not to be a slave at work. I have met so many people who has to work 40 hours to pay their bills cause they gotta show off the latest car to their friends and coworker. My current and total debt is $5, 000 dollars. I can only work 35 hours and enjoy my life. Go places, eat outside. I keep a basic lifestyle. I don't buy what I don't need. I have lived pay check by pay check and it does suck.

[PW]

Keep emotions out of your finances everyone. You be better off for it. Be DISCIPLINED, follow your brain, logic, and MATH, not your feelings.


Honestly, if you just keep your feelings out of your finances, you wouldn't even need to financial advice in the first place.