The Debt Snowball method is one of a few popular ways to pay off your debt. In this post I am going to go through the method of the Snowball and give you a few points to think about, so that you can decide if it may help you on your journey to pay off debt.
Before starting write down all of your debt, to get an honest picture of what you are working with. If you need help don’t be afraid to talk to someone, I am linking the National Debtline (UK) here. I have linked it so that if numbers or times change you should be able to still get the best information from the website.
Pay debts in order of balance amount
Write down your debt one by one in order of balance smallest to biggest, at this stage ignore your interest rates.
If debts are the same balance, put the debt with the highest interest rate first
If you have two debts with the same balance, look at their interest rates which one has the highest? This one will be paid first before the other with the same balance.
Start with the smallest amount
You focus will now go to paying the smallest debt off first.
Focus on paying off one balance at a time, continue paying off minimum payments for all other debts.
Continue to pay minimum payments on all other debts, once all minimum payments are made and all your bills have been paid anything you have extra will go to your current focused debt (current smallest debt).
Things to think about
Are you someone who thrives from results? – You can quickly gain momentum with this method, when you see the first one get paid and possibly a lot quicker than you thought the others start to feel easier to tackle.
Gives you a target – With them all written down you have an end goal, something to reach for which helps you get a handle on it all.
If you have a very large interest rate on a big loan, the interest will be adding up. However if you are making great strides with paying your other debts, there is a large chance you are doing better than you have previously with making a dent in your loans so the interest could be worth it.
You will need to learn to talk to your loan companies as the one that is last on your list could be the one shouting the loudest.
Is this a method you are thinking of using?
Disclaimer – This post is designed to show you a method that could help you pay off your debt. However if you are struggling with money what ever stage you are in your journey please call a debt helpline to discuss further. My full disclaimer can be found here.