Debt snowball Balance order or Interest rate - what would you do?

wannabedebtfree_2

Right, have just sat and gone through the snowball calculator and if I snowball my debts by interest rate I will save around £200 but it will take the same amount of time to pay off as if I pay off my balances in order of size.

Now part of me says "Save every penny you can" (particularly as I will be a student for the next year in receipt of benefits and grants/loans) but the other part of me wants to tick one debt off at a time and some of them aren't very big so psychologically I think it would be better to get rid of a few of the smaller debts (3 of them are just under £1000 between them) over the next few months so I feel like I'm actually getting somewhere. I have 9 debts (2 are in my OHs name) so getting rid of 3 quickly might feel quite empowering....maybe....?

Maybe once I get rid of the 3 'small debts' I could then snowball the large ones by interest rate.

What would you do?

life_in_termoil

I'd get rid of the smaller ones first to get you into the mind set of paying things off. Its rather rewarding getting the totals down but its a much better feeling knowing 1 debt has gone and then another and another.

Good luck

Tixy

If it will take the same amount of time then surely the last months payments will be £200 less if you go for interest rate order? You can do a lot with that £200 that month!

I'd stick to the interest method, although might consider if there is a very small debt you can pay within a couple of months for a pyschological boost.

jdwmfc

What is the interest on the cards?
That would be my first thought. Although paying off a card is great are the others raking in a lots of interest?
When I started this I had £31,000 in debt on cards and one loan, all were 0% interest, I paid off the loan, it made me feel better and it also freed up £200 a month to repay other loans.
I then made sure that all the remaining debt was interest free.
Now I am just paying off the card which the interest free period runs out first on. Then moving onto the next, while keeping the minimum payments going on the others.
Not sure if it helps.
Also getting a signature on here is a really good way of making you work to pay of the debt.
See mine below, it lists allmy debt and also the threads I have joined that are helping keep meon track
I probably made no sense but good luck anyway.
It can actually be quite fun. Can't believe I just said that!

wannabedebtfree_2

Ok, just done a quick balance/interest check on everything, and actually 2 of the small debts are the highest interest (the OD wich charges me a flat rate of £10 per month works out at around 34.9% - have never worked that out before! The small credit card 31.1%), so I'm hoping once all my benefits are sorted and I've paid my rent/council tax out of my first grant payment that there might be enough to clear one if not both of them. I'll know more the end of this week once my housing benefit claim has been processed, as I'll know how much rent and council tax I need to pay out of my grant, I'm paying 17 weeks so that I know it's covered up until my next grant payment.


If I can clear those 2 smaller ones I will have straight away freed up around £50 per month to put towards the other debts. 4 of the cards are all frozen (I opted to freeze the accounts and never use them again about 2 years ago) and they are between 16.9-19.9%. The next biggie, which has been really hard to pay off as it never seems to go down is 27.9% which is horrific! My OH has a card that is on a fixed rate of 5.9% for life of balance but the best offers they keep sending us are only 6 month deals otherwise I could transfer around £5k onto a better rate.


I daren't apply for any more credit to rate tart with as I've been refused a consoldiation loan about 18 months ago and a student account about 4 months ago. I think I'm considered high risk because I'm using a high % of my available credit. I don't have any late payments, and no defaults or CCJs, in fact that's why they haven't helped me so far!


Hey Ho, I know where I'm at and it might not be pretty but I'm blooming determined to get rid once and for all!

Firewalker

Hi there. I'll also start withe smaller debts and clear these - clearing debt is mainly a mind game and scoring some quick wins is very good for morale and determination. The I important thing is to put the money released from paying one debt back into the other - balances start going down really fast.

Good luck and keep focused. Oh, and whatever you do don't get more credit (can't get rid of debt by getting more of it) and tarting is usually not worth it and potentially dangerous (people forget). It is another matter if you could get some 0% deals.

Firewalker