The snowball strategy says to pay off your smallest debt first, then the next smallest, and so on until you’re out of debt.
When I first heard of this I thought it was silly. Clearly the optimal strategy is to pay off the debt with the highest interest rate first. That assessment is mathematically correct, but psychologically wrong. The snowball strategy provides a sense of accomplishment and encouragement by reducing the number of debts as soon as possible. Ideally someone would be able to pay off at least one debt before their determination to get out of debt wanes.
My point here isn’t to give financial advice. I bring up the snowball strategy because it is an example of a problem with an obvious but naive solution. If someone is overwhelmed by debt, they need encouragement more than a mathematically optimal strategy. However, the snowball strategy may not be psychologically optimal for everyone. This further illustrates the idea that optimal real-life strategies are more complicated than mathematical models.
Many things that don’t look optimal are in fact optimal once you take the necessary constraints into account. For example, software that seems poorly designed may in fact have been brilliantly designed when you consider its economic and historical constraints. (This may even be the norm. Nobody complains about how badly obscure software was designed. We complain about software that has been successful enough to criticize.)