There are many strategies to get out of debt. Sometimes it can be a challenge to pick the best method specifically for you. There are many forum posts out there with questions along the lines of out of these three methods of getting out of debt, which one is the best for me? I am writing this post to try and motivate some discussion and thoughts on how to make this sort of judgement. I hope that being able to better judge which strategy is best for you will also help pay dividends when it comes to other decisions not just involving getting out of debt, but also getting into debt.
The main criteria most people use to judge a get out of debt scheme is the amount of interest the strategy will save you. If you only think about this criteria when coming up with a get out of debt strategy, the problem becomes a very simple math problem with only one solution: pay off more debt as soon as financially possible. This sort of attitude, while laudable from perhaps a moral imperative, is typically not sustainable for a variety of uncontrollable circumstances (some sort of emergency comes up) or other human factors of unhappiness from the stress of a high level of sacrifice over whatever extended period of time it takes to get out of debt.
Naturally, if paying off as much debt as soon as possible isn’t sustainable, scaling back to some level that is sustainable is wise. Now we enter into a grey area of trying to balance two objectives of 1. minimizing the cost of your debt (interest) and 2. paying off the debt at a reasonable, sustainable level. The balance between these two will vary from person to person and where you are on this spectrum will depend on your own limit for paying off debt.
When most people begin seriously tackling their debt, they arrive at this point and get stuck here. I have seen people who get frustrated because they enter into a vicious cycle of feeling remorse over indulging in something no matter how small because of its cost and despair over having to sacrifice opportunities for happiness to deal with their debt. I’ll be posting various ways you can experiment with to find out what your sweet spot is.