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Tackling your debts

Can the snowball method help you clear your debts?

Posted 16 March 2017 by Christine Walsh

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Snowballing is one way to pay off your debts, but don’t forget to look at how much you’re paying in interest too.

If you’re looking into ways to clear your debts, you might have heard of the snowball method. But what is this exactly and is it really the best way to get debt free? Let’s have a look at the facts.


What’s the snowball method?

Put simply, the snowball method is when you list your debts from the smallest to the biggest and focus on paying off the smallest one first and so on and so forth. Not only that, but when you’ve paid off the smallest debt, you put the money you were paying towards that debt towards the next biggest debt on your list.

The aim is to put yourself in a position where you gain momentum and have more money to put towards each debt as you go along.


So with snowballing, you will always be in a position where you’re paying the minimum amount towards all your debts apart from the smallest one – which you will overpay. If you haven’t got enough money to pay more than the minimum towards what you owe, then the snowball method isn’t for you.


Is this the best way to pay off debt?

Snowballing can be an effective method of clearing your debts but you also need to think about how to get debt free in the fastest and most economical way. Whilst it can be tempting to start with the smallest debt because you’ll get the satisfaction of ticking if off your list sooner, it makes more sense to let the interest rates you’re paying be your guide instead.

Rather than paying the smallest debt first, focus on paying off the one with the highest interest rate.

This will save you money, as you’ll be knocking the most expensive debts off your list sooner rather than later and you’ll then have even more money to put towards your other debts. If you prioritise paying the debts with the highest interest rates you should find that you become debt free faster, rather than simply paying the smallest one first.


What if I can’t make my minimum payments?

In general, it makes sense to pay more than you need to towards your debts, as if you just make the minimum payment every month most of your money goes toward paying off the interest, rather than the actual debt, so you could end up paying your debts off for quite a while.

But you should only pay more than you need to towards your debts if you are able to make at least the minimum payment on all of them, and you can keep up with your other essential bills, like secured payments and Council Tax.

If you find that you can’t make all your minimum payments or you can’t afford your other important bills each month, it might be best for you to look into a debt solution. Debt solutions are plans that help you afford your repayments – they all involve either lowering your repayments, lowering repayments and writing debt off, or suspending your payments altogether. 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.