How have you approached paying off debt in the past?
I’ve never had any debt (excluding student debt which isn’t really debt) but the snowball method has always seemed the most sensible to me.
Yes it might be more expensive in terms of interest etc but it’s a much better method psychologically
to snowball method!
Plan, see end goal. Don’t let expected hiccups throw you off or un-motivate. Don’t compare your timescale to anyone else, if it takes you a bit longer than the story or you have to replan, you’ll still feel exactly the same the moment your nearly/fully debt free.
I still cannot wait to be debt free, for good! (Or as long as possibly can!!)
My understanding of the snowball method is that, as each debt is paid off, you put the money that was paying that debt off towards the next debt up the scale, paying that off quicker, and so on until they’re all paid off.
This is an amazing article. Shared to a friend who is finding it hard and she loved it
I’ve done some (very rough) calculations on my own debt (2 CC and a loan) and if I go ‘highest interest first’ I reckon I’m almost three and a half years away from clearing it all down to zero.
If I go snowball, I’m almost four years.
The difference is a few months and paying more interest, but what has leaned me towards the snowball method is the flexibility. By the time I clear one debt completely, I’ll have a bigger pot of cash, which gives me a bit of a buffer if ‘life’ happens (I’ve been made redundant three times in the past). Sure, I’ll be aiming to put all that freed up cash to lower the debt, but if one month I need a car repair or some such then it’s a bit easier to absorb that without adding more debt.
I think! Great article regardless. Thank you!
My view on this is to go uncomfortably at it like a raging bull, throwing money at it and in doing so cutting back to the bone on any unnecessary spending, ditch the treats, ditch the takeaways, ditch sky TV, ditch alchohol and do it for say 6mts or 1 year, you will be amazed at how your attitude changes to spending, it makes you realise how shit it is to have to climb out of a dark hole that is so easy to fall into and therefore will make you want to avoid falling back in. Cutting back on all those non essential things and putting the money towards your debt is the best way I believe.
I have manged to get myself to a point whereby my debt is manageable and I can still afford treats and meals out etc.
I would much rather pay of the one’s that have interest coming up first. Resent having to pay anymore than I have to.
That’s great, I look forward to getting to that point.
I think, for me, the psychological side is where the snowball works. It’s bad money management, yes, but it was psychological issues that got me into this (the ‘ignore it and it’ll be ok’ and ‘tomorrow, I will…’ approached don’t work, who knew!) so getting a wee buzz from closing down my Argos storecard and, next month, my PayPal credit account, is enough to spur me into more and more action.
I reckon, by the time I’m left with my big three only, I may switch to highest interest first but by then I’ll have momentum on my side. I don’t quite have it yet, the old habits are easy to fall back into after all.
That is one approach! Whatever works for you I guess.
I would still like to live a semblance of a life, go to some gigs, get takeaway now and then, because hey, life end real quick. All about balance for me, but you’ve tempted me into looking at what I COULD achieve if I took that approach… thing is, I reckon I’m already pretty paired back, bar another £110 a month if I really ditched EVERYTHING I’m not sure i could make much more space in my budget by going full on raging bull!!
I think the screwing back approach is very hard to achieve but I think it also makes you think harder about the difference between what you want, what you’d like and the things you actually need as lots of debt that we manage to get ourselves into is totally unnecessary and looking back I’d say that in my past most debt related problems are to do with me thinking I need something like a new phone when in reality I didn’t need it I just convinced myself that I did. So now I’m out of my hole I can recognise the signs, I know I don’t want to be back in the hole cos it’s a shit place to be and the road out is a really shit journey . But like you mention, life is for living and I’d say my year of shit has and will make my next 10, 20, 30 or 40 far more enjoyable as I have 1 less battle.
And just saying, yes I agree, sarcasm is the finest form of wit.
I have to admit I have been able to consolidate all my debt on to 3 seperate credit cards all of which are interest free until 2020/21 with the exception of a small one which is due this year.
It does make it easier to see which one to pay off first. I have a loan as well which is finished Feb next year and that currently takes up a bulk of money so looking forward to that being over and done with! Then I can re-assess and take it from there.
I do a mixture of the two…
I’m paying off a 0% credit card with £5k on it (£200pm) that will mean it’s paid off by the end of the interest free period, at which point it’ll be 19% APR, and I’ve 2 interest free loans (one for a Chromebook with PayPal and one for my sofas).
I had a spare £200 after closing my ISA so rather than shove it onto my credit card, I paid off my Chromebook outright so I could get that easy win psychologically. It also means I have an extra £15pm I can pay off my credit card with!
Chromebooks rock, 100% the way to go.