The Power of Small Wins When Paying Off Debt
If you ask me how you should go about tackling paying off debt, I will tell you the method I learned from Dave Ramsey, which is what I did in my debt-free journey and that is the snowball method. List your debts smallest to largest and attack your smallest debt first while making minimum payments on the rest of the debts. And NO, it doesn’t matter if debt #5 on your list has the highest interest rate. Start with the smallest debt amount first and put your all into getting that paid off as quickly as possible.
There is actually a pretty big reason why Dave Ramsey chose to implement this concept into his teachings and if you Google “the psychology behind small victories,” you will see there are numerous studies out there and authors that have written books that explain the power behind small wins.
When you are staring down your debt totals and you decide to tackle that $30,000 worth of student loans before that $300 credit card bill, it can feel quite daunting. Heck, to a lot of people, it may feel impossible or that it’s going to take decades to achieve. Are you feeling so inspired right now? No! It would be so easy to give up or not even get started!
But, if you decide to start small and take that baby step toward financial freedom by paying off that $300 credit card bill, you will feel the victory. It will feel really good. You will get to check that off your list a lot sooner and it would pump you up and bring you confidence that you can actually do this. You will be even more motivated to go for that next debt on your list!
In a Harvard Business Review blog post, they list out multiple ways small victories can benefit us when trying to achieve goals or build healthy habits. “Breaking such problems down into a series of more modest steps, all on the path to the ultimate goal, reduces fear, clarifies direction, and increases the probability of early successful outcomes – boosting support for further action.” See?
A Psychology Today blog post about small victories begins with “In his book, The Power of Habits, Charles Duhigg uses the term ‘small wins’ to refer to modest behavior changes that can set off a chain reaction of more and better changes.” Did you catch that? More and better changes. I don’t know about you, but I like those words.
The blog goes on to explain how “every small win gives you a spritz of dopamine, that feel-good brain chemical that is linked with motivation.” If you keep it up and start knocking out debt, you will begin to build momentum because of the self-confidence that will build from the small victories and your debt snowball will get bigger as you are able to put more and more money toward debt. It sounds like a win-win all around.
It’s also very common for people who go on debt-free journeys to begin to develop healthy habits in other areas of their lives. There have been multiple debt-free screams I have listened to on Dave Ramsey’s podcasts where the people have also lost a significant amount of weight because they have started making healthy changes to their diet and built habits in working out as well. It’s amazing what the small wins can add up to over time and the big changes they can create in lives.
Taking on the debt-free journey is not an easy task and it’s not going to be achieved perfectly. I love what Lara Casey, the founder of Cultivate What Matters says, “Little by little progress adds up–and imperfect progress is still progress.” Little by little adds up. What little can you start today?
Want to learn more about the debt snowball and how to start living life on a budget? You can buy my Budget Workbook to get started!