The Emotional Impact of Debt: A Guest Post by Froogal Stoodent


As this tragic story demonstrates, debt can have life-shattering consequences. Seriously, go read that story. I’ll wait here.

Done? OK, welcome back! Pretty somber stuff, huh?

For all the talk about money—how to save it, how to manage it, how to invest it—there is very, very little talk about the emotional side of money. And that’s a topic that we obviously cannot continue to ignore!


After all, we are emotional creatures. To assume that people do (or that they should!) put emotions aside and behave in a manner dictated by logic is to misunderstand the human condition. We are all scared of failure, we all dream of greatness, and we all want to be better-off than our neighbors and friends. These fears and desires are based in emotion, not logic. Logic is therefore a poor tonic for such issues as fear or greed.

Financial experts often advise us to ignore our emotions and govern our money with logic alone. While this is good advice if taken in the spirit it’s offered (i.e. don’t panic), it can be too easy to fall prey to decision paralysis instead. This insidious event can lead a person to bury his head in the sand until a seemingly insurmountable pile of debt crushes the life out of him.

Don’t let it get to that point! The sooner you take on your debt, the sooner you’ll be out from under its stifling weight! Here’s how:

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The Methods

You may have heard of the so-called ‘debt snowball’ method: pay off the debt with the lowest amount owed; once that’s paid off, put that extra money toward the next smallest debt, and so on.

A number of people take issue with this, arguing that it’s more productive to put your money toward the debt with the highest interest payment first (the ‘debt avalanche’ method). Advocates of the debt avalanche often fail to understand why people would use the obviously inferior debt snowball method instead.

The answer should be apparent, but I’ve found that numbers seem to obscure or distort the truth as often as they reveal it. The simple answer to why debt snowball works is that it gets people out of debt for the same reason they got into debt in the first place: because of how it feels!

Debt Snowball Feels Good

Let’s consider a fictional person, “Robert.” Robert has debt on multiple credit cards, plus student loan debt, a car loan, and a mortgage, totaling $130,000. He’s just realized that he has over 4 times as much debt as his annual salary! The ensuing feeling of anxiety overwhelms Robert, as he feels buried under a mountain of debt!

Many people are completely crushed by realizations such as Robert’s. Sometimes, they turn to alcohol or drugs to ‘escape’ the reality of their financial situation. As the link above shows, some           people are even despondent enough to take their own lives! And, since student loan debt cannot be discharged by bankruptcy or other legal means, such extreme actions are understandable.

Debt snowball turns that emotional state around, giving debtors a sense of financial control and empowerment—often for the first time in their lives!

Robert decides to use the debt snowball method to attack his debt. First, Robert pays off a $2000 credit card debt in six months. That quick ‘win’ helps him realize, “Hey, I can do this! I can actually defeat this debt!”

Even though the $2000 debt that Robert just paid off is only a small fraction of his total debt, the feeling that he’s just “won,” that he’s “beaten” his creditors, can be intoxicating! That feeling energizes Robert, encouraging him to redouble his efforts and tackle his next debt (a $4500 car loan) with renewed zeal!

Debt Snowball Feels Simple 

So much of the financial world seems extremely complicated. Variable APRs, small cap vs. large cap stocks, shorting, put options, bonds, dividends, tax-sheltered accounts, whole vs. term life insurance…

This stuff really isn’t that difficult to understand, once somebody boils it down into plain English for you. Often, the problem is finding somebody who can explain these concepts plainly and simply, but isn’t incentivized to oversimplify or slant the truth in order to make money by leading you to a less-than-ideal choice.

Debt Snowball Feels Easy

In contrast to much financial advice, the debt snowball method is really simple to implement. It isn’t trying to deceive you in order to make big bucks for a financial company or a Porsche-driving Wall Street financier, nor does it require a PhD to understand what you’re doing! Just look at your outstanding balances, put them in descending order, and get going!

Combined with a savvy marketing strategy to spread the word about this method, debt snowball is now a well-known and established method of destroying debt. It has worked for a lot of people, and it can work for you, too!


The Bottom Line

Even though I ultimately agree that debt avalanche is the superior method, I understand why the debt snowball approach is useful for so many people—it accounts for the emotional state of the debtor, not just the financial state. Debt snowball tricks you into getting just as excited to knock out your debt as you were to get the stuff that put you there in the first place!

Essentially, it turns debt repayment into a game of sorts. And it simultaneously sets up the rules so that you get a couple quick wins to boost your confidence, turning despair into self-assurance.

  • Using the debt avalanche is the best way to knock out your debt ASAP.
  • The debt snowball is the best way to trick yourself into getting started.
  • Debt jump-start is a hybrid of the two, which I’ve described here.

Ultimately, it doesn’t really matter which method you prefer, since decision paralysis is far more harmful to your finances than picking a “sub-optimal” approach. When it comes to defeating your debt, there is no “wrong” approach—just pick the method that most appeals to you, and stick with it!

Always remember that the most important step in overcoming debt is the first one!

I hope you enjoyed this guest piece from Froogal Stoodent!  If you'd like to check out more of his content click here!

If you have any questions, comments, or topics you'd like for us to cover, email me directly or post them in the comments below!

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