What is Debt Stacking 

Over the years I have taught families the concept of debt stacking. One of my clients was $200,000 in credit card debt owed $100,000 on vehicles’ and had a mortgage of around $300,000. We put the client in a product that took care of debt stacking for them. The results were we got them out of debt including paying off their home in just over 7 years, and saved them $595,ooo.oo in interest charges.

How to debt stack.

Let’s act like we all live in California and we are all in debt. The numbers I will be using were fairly common when I worked with clients. Debt stacking is taught in different ways but I prefer to start with the lowest balance, pay it off and go to the next.

                        Starting Balance             Monthly Pmt                     Actual Pmt                Extra Pmt

Home                  $200,000                   1,200 @6% int                     1200.00                        0

Car                           40,000                      607 @2.99 int 6 yrs            607.00                         0

Car                            15,000                       312 @0% int 6 yrs              312.00                          0

Discover card          9,500                         190                                        300.00                     110.00

Visa                            7,000                         140                                       200.00                        60.00

Master card              5,000                         100                                        150.00                         50.00

Master card               2,500                           50                                        100.00                         50.00

Home Depot              2,000                          40                                         100.00                         60.00


                              $281,000.00                  $2,639.00                          $2969.00                    $330.00

Let’s start off by adding the $330 extra payment just to the $40 Home Depot and pay $370 to the Home Depot.  $2,000 divided by  $370 = 5.4 months and Home Depot is paid off.

Now take the $370 and the $50 payments to Master Card payment now pay $420.00.

Divide $2,500 by $420 = 5.95 months and the first Master card is paid off.

Following these same steps you can be completely out of debt in approximately 12 years.

Debts stacking only work if you pay extra each month on your accounts and continually do it. Some people teach you to take the largest balance and highest interest and pay it off first. That works also but we like to see results so paying the lower balance first gets us to feel that we have accomplished something.

While you are debt stacking the interest still is added and with what I have shown you it does not take that into the equation, it might take a few months longer to pay things off.

If you charge more on your cards or buy a new car or home, it can be added in but it will lengthen the time until you are debt free.


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20 Responses to “Debt Stacking”

  1. Hi Dale,

    apologies if I am slow on comprehending this. So “Debt Stacking” is the process of where someone in debt makes the concerted effort to pay off debt faster. Hmmm, to make an extra payment or higher payment? Is that it?

    Happy Dating and Relationships,

    April Braswell
    Single Boomer Dating Expert

  2. This is very interesting. I am going to start making extra principle payments on my mortgage next month! Thanks for the information on debt stacking, it is a real eye opener!

    Lisa McLellan
    Babysitting Services, Nanny Services, and Nanny agencies

  3. bryan says:

    This is great tool for people that are in debt trouble. Debt can be a grueling burden…Can you show the people in DC this?

  4. Rob Northrup says:

    I have used this mthid effectively in the past. The other key point is that as you pay off cards you cannot fall back and use them. If you use a paid off card, you need to pay the balance in full the next month.

    Seize the Day,

    Simple Family Survival Tips For Disasters and Emergencies

  5. Sonya Lenzo says:

    That is a very good model!!! Eye-opening. But as Rob says, it would take discipline as well to not use the cards anymore.
    Sonya Lenzo

  6. Like Rob said, if you pay off the debt on a card, and then go back and start using it again, you will soon find yourself right back where you started. What motivation do you use on people to prevent them from doing that?

    Tim Van Milligan, helping you Make Money Online, God’s Way!

  7. Very interesting! But may I ask, if people are paying extra each month to pay off their debts – where are they getting that extra money from? and if they do have that extra money – how and why did they get into debt to begin with? Ok, ok, yes there will be debts for home and car purchase, perhaps for emergencies…. but after that? Why all the credit card debt? It must be a horrible mental burden.

    Mixing Romance, Feet & ESL lessons
    Enjoy Being Online here!

  8. Peggy Larson says:

    Excellent program and the only one that truly works. Does take discipline but the feeling you get as you see the debts disappear is motivation in itself. Of course the key is to stop using credit cards at all.

    Peggy Larson
    Quilting – Colors and Fun!

  9. Ok Dale,

    I sort of get this concept, however where does this “extra payment” come from that you speak of from the beginning of the debt stacking table. Can you explain this a little more for slow people like me?

    Sabrina Peterson, NASM CPT,CES
    Corrective Exercise for Every Body

  10. Mark says:

    Very cool system… I have heard of paying the largest interest first, but I like the psychological rush of accomplishment that your strategy includes!

    Direct Selling Advice, Leveraging Relationships for Long-term Profit

  11. Great system. I have used it with tremendous success and am now after ten years out of the credit card rut. Thanks for spreading the word on a process that actually works!


  12. Dale,

    Hello. It appears that debt stacking is just as powerful as the law of compound interest. Thank you for sharing this with us. I can see that we all have a lot to learn from you. 😉

    Yours In Health!

    Dr. Wendy

  13. I appreciated this little lesson on debt stacking because like others here mentioned
    I had learned the method of paying the highest interet rate cards off first, which usually takes longer and you don’t see as immediate a result as you would knocking off a lower debt card.

    I can see where a combination of the two could be really useful as well.
    Do debt stacking to pay off a lower balance card & feel great to have that one out of the way. Then maybe the next month make a bigger payment against a higher interest rate card to keep that from getting too close to your credit limit and give you more breathing room.

    Great tools you’re teaching us here at children’s wealth, Dale!

    The Success Secrets

  14. That was way too easy and absolutely awesome! I like the lower balance attack first because it is great when you see a zero balance. It’s like losing those first few pounds to make you keep excercising!

    Jen B
    The Harwood Group – Tinnitus, Chronic Illness, Fears, and Anxiety

  15. A friend and I debated the best way to pay off the debts- like you mention, highest balance/interest rate vs lowest balance. While I felt like the high interest one would be better, I am now using the smallest balance method on my own personal finances – like you say, I need to feel like I have accomplished something.

    Fun and Free Activities

  16. alam ghafoor says:

    That is simple magic at it’s best, I have always believed in using debt “intelligently” and by paying off the smallest then working your way up lets you see tangible results. Main thing is discipline.


  17. Debt stacking is the easiest and most effective way to pay off all of your debts in the quickest way possible. I’m a huge fan. It cleared up my credit card debt in a hurry.


  18. michael says:

    I like working with a smaller balance and then working my way up.

    It’s motivating to see progress.


  19. Very cool, I would love to get out of debt and may try this with my HEL.

    Robert Kaufer
    Law and Health with Robert Kaufer

  20. I like to go with the lowest balance first in order to show some progress and get a small win out of the process in the beginning. After that it’s time to tackel the high interest accounts one by one.

    Steve Chambers
    Body Language Expert