Know Your 'Money Personality' to Make a Debt Escape Plan

Going beyond the conventional wisdom about how to get out of debt.

ByABC News
March 16, 2015, 2:34 AM
If you've got a mountain of debt the avalanche method may help you dig out.
If you've got a mountain of debt the avalanche method may help you dig out.
Getty Images

— -- I’ve always believed that people struggling with credit card debt should pay off their highest interest card first, but today I’m here to tell you maybe that’s not the right choice for you.  I advocated  paying off the highest interest card in my book “Save BIG” because doing so saves you the most money.  Now, along comes another author, with another perspective, namely Beverly Harzog, with her book “The Debt Escape Plan.”

Herzog believes you should figure out your “money personality” in order to determine which credit card repayment plan will work best for you.  Some people are more cerebral and take pleasure in knowing they’re saving the most by paying off the highest-interest credit cards first.  Others are more emotional and do better paying toward the smallest balances first because it’s a great mental boost when you get cards completely paid off.

Harzog’s Money Personality Quiz divides people into five different categories, including the “Budget Buster,” a person who fell into debt from overspending, and the “Clever Cheapskate,” who racked up credit card debt because of a life crisis like an illness or job loss.  You can read more about each type in the book.

Once people know their money personality, Harzog guides them toward one of three snow-themed debt escape plans:

The Debt Avalanche: With the avalanche method, you list your credit cards and start with the highest interest rate. After you pay off that card, you move onto the card with the second-highest interest rate, and so on.  Again, you save the most money this way.

The Debt Snowball: In this method, you pay off your smallest balance first and then you attack the second-smallest balance, and so on. The idea is that, because the balances are low, you pay each debt off faster and get a big psychological boost.

The Debt Blizzard: The Debt Blizzard is Harzog’s own creation. It combines the emotional boost of the debt snowball and the money-saving benefit of the debt avalanche. First, you pay off the smallest balance. Then, you switch to the Avalanche method and pay off your debts from largest to smallest interest rate.

I wonder if she wrote this book in winter?  And I wonder if, just maybe, she’s onto something that will help you. Do you recognize which strategy would help you stay on track and dig yourself out from under your debt? "A one-size-fits-all approach to debt elimination just won’t work,” said Harzog.  “This is why I take a customized approach.”

Opinions expressed in this column are solely those of the author.

Elisabeth Leamy is a 20-year consumer advocate for programs such as "Good Morning America" and "The Dr. Oz Show." She is the author of Save BIG and The Savvy Consumer. Elisabeth is also a professional speaker, delivering talks nationwide on saving money, media relations, and career success. Elisabeth receives her best story tips from readers, so please connect with her via Facebook, Twitter or her website, to share your ideas.