Harvard Study Discovers The Most Effective Way To Get Rid Of Your Debt

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It’s a sad truth that too many people in our society are crippled by debt. It’s one thing to have a mortgage or interest free student loan that you make regular payments towards, but it is another thing entirely to spend your days juggling high interest finance and credit card bills that you simply can’t tackle.

In fact, a 2016 study found that the average American household is in $16,061 of credit card debt, while car loans equate to $28,535 per household. Household debt is said to have increased by a whopping 11 percent in the past decade and much of this is largely due to what is often referred to as a “spendy culture.”

If you’ve ever been in debt, or perhaps you currently are, you’ll know that there is a huge amount of stress that comes with owing money, debt often taking a steep emotional toll on those who are struggling. Looking to figure out the best way for people to get rid of debt quickly, Harvard University studied the topic extensively, managing to come to some fairly credible conclusions around the most effective way to get rid of your debt.

While it may seem to make more sense to try to pay off everything at once, the study found that focusing on one debt at a time was actually the most effective way to deal with things. Being able to see entire debts erased proved to be motivating for people and spurred them on to keep paying off more and more.

The study authors conducted three separate experiments regarding credit card repayment and found that ultimately, those who focused on paying off one account at a time, starting with the account with the lowest balance, paid off their debt the quickest. The researchers suggest that “focusing on paying down the account with the smallest balance tends to have the most powerful effect on people’s sense of progress—and therefore their motivation to continue paying down their debts.”

“These results have important implications for the millions of consumers who carry balances on multiple revolving debt accounts — and for the organizations that help them monitor or repay their debts,” the Harvard Business Review reported. “To the extent that a consumer’s debt accounts have similar interest rates, he or she should concentrate repayments first on the cards or accounts with the smallest debts, paying off those first.”

The study also found that pooling debt into a consolidated loan may not actually be as effective as it has been hyped up to be, with the authors finding that keeping the debt separate was psychologically more rewarding and made tackling the debt seem easier. “Unless it’s possible to consolidate those debts at a substantially lower rate, our findings would argue against pooling debts into a single larger one as this can actually be demotivating and could slow progress in repayment,” HBR concluded.

Read next: 4 Habits To Ditch If You Want To Save More Money In 2017

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