I recently read an article about the best way to pay down your debts. Logic dictates that you should pay more towards the balances with the highest interest rates. According to something called the “Snowball Method,” however, it’s better to first pay off the accounts with the smallest balances.
Paying off small balances tends to have a psychological effect on your sense of progress, providing additional motivation to pay down the rest of your debts.
Years ago, when I had several credit cards with varying balances and interest rates, I intuitively made an effort to do just that. Instead of making a proportionally bigger payment on accounts with bigger balances and higher interest rates, I focused on paying off the $500 department store balance, first.
It simplified bill paying and, more importantly, it felt good to see those accounts zero out. I still had the bigger accounts to contend with but overall, it felt like I was making progress.
Does the “Snowball Method” apply to anything else? I suspect it does. If you have five projects on your plate right now, in determining how much time to give each project, it would be logical to consider the potential payoff of each project. Projects with a bigger payoff should get more of your time, one would think. But that would ignore the psychological impact of completing some of the smaller projects, first.
I know, almost every expert says we should do the most important things first so that we make progress on them, and only then work on the less valuable tasks. (Big rocks first.) Hell, I’ve preached that myself.
But we’re human and sometimes we need to do smaller things so we can cross off them off our list and have a sense of progress.
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