Gobble the whole pie or take a bite out of each?

trulymadlydeeply_indebt!

I have been lurking in the shadows for a couple of months and taking on board everybody's advice and I just wondered, for those of you with more than 1 or 2 creditors, are you:-

a) Concentrating on one debt at a time or

b) Chipping away at each and every one, every month?

Just curious to see the best way to play it. Commonsense tells me to focus on the highest debt, but I quite like the feeling of getting rid of the smaller ones in "quick hits". Opinions please.

Crown

Hi, this is a regular topic on here.

The general concensus is that it is best to tackle the debt with the highest interest charges but in some ways I disagree with this.

I feel that getting rid of those small amounts gives you the psychological boost to continue your debt free journey. Also I do not look at the my total debt (at its highest £49,500 now £39,700) but have broke it down into smaller amounts in sort of personal challenges to myself. I find it much easier trying to get to a target of £1000 a time than I would by trying to sort it all out in go. Take Baby steps and you you will eventually Walk and then Run!

Also anyone looking into this should make sure they take a look at whatsthecost.com and check out the Snowball calculator. This can make a huge difference.

Good luck with it!

Storm

It depends really on what motivates you best, how many debts, at what apr, how much you can afford to pay off each month etc etc.

If you look at the snowball at https://www.whatsthecost.com and put in all your figures it will recommend which debt to through any extra at each month, based on aprs so you clear the debt quickest. However, many people on here like to target one debt at a time, starting with a smaller one so that they can see them being crossed off the list.

hypno06

I do a bit of both, for example if I can see on my snowball list that one debt is approaching a mile stone eg being under £3000, I will concentrate on that one for a bit to get it down, thereby giving a psychological boost, but generally I am throwing it at the one with the highest APR.

When I have got one debt close to being paid off, then I will do the same - concentrate on this one to give the psychological boost of having something paid and closed!

Seems to work for me but obviously everyone will have their own way of doing things - doesn't really matter as long as the debts are going down and we are not falling into bad spending habits again!

vix1978_2

I have to admit that whilst financially I would be better off paying the highest APR first I am concetrating on clearing the smaller ones. This is to help me stay on track, and because the sooner I get the smaller ones down the sooner I will only have 1 or two companies to deal with.

Crown

What I found though in my case was that I was able to clear around 6 small debts with one months money. this gave me not only the feeling of getting somewhere but of couse stopped the tirade of calls and letters.

One months worth of interest I feel is worth the cost when compared to the headaches and time it takes to respond to the other creditors letters.

Lucy1982_2

I'm really new to this and I'm trying to knock a little off everything. I have 2 loans that are basically sorting themselves out at the moment and I also have 2 store cards.

SC 1 - £56.12 (APR 17.9%)
SC 2 - £450.00 (APR 24.9%)

I've just paid £28.12 off store card 1 and intend to clear this next month. I realise it has a lower interest rate than the other, but it is a smaller amount and I feel better getting rid of something. This may seem illogical but I'm female it's allowed!

The next aim will be to clear SC 2 (by the end of the year ideally) before trying to pay off the loans early. I also have an overdraft and I'm aiming to leave some money in my account at the end of each month to deal with this!

ifstar

I think it depends on what your amounts and APR's are. If you do have a few low balance amount of maybe just a couple of hundred or less then it might help you to pay these off.

Financially and logically it makes sense to pay off the highest rate first however as some of the people above have pointed out, it is great to actually clear some debts off quickly as it gives you a psychological boost as you are getting to see your debts end and your hard work is being reqarded sooner.

sammy115

I once watched a programme, I think it was Oprah and they had couples on and they were trying to ditch the debt. They devised a plan where they made a list of all debts - how much outstanding, and what the APR's where. Based on the two figures (outstanding and APR) they were given a ranking and they got rid of the debt that way.

So it was a combination of the two ways you were talking about not either or.

Hope this makes some sense!

Shineyhappy

If you don't mind me asking how much are the debts in question and what are their aprs?

Personally I cleared my smallest debt first which was 450 pounds and then am on the second smallest one (this has the highest apr) then it will be my overdraft and then a secured loan, then the mortgage if I am feeling brave! I will feel better with fewer debts, but that is just me!

Good luck with clearing them all, regardless of which order you do it in!

rayday2

I am in a Debt Management Plan so have to work payments out pro-rata but I would in an ideal world like the number of companies I have to deal with to be smaller so for the morale boast I would go for smallest first. But interest is no option for me its all frozen for now.