Snowballing

JourneyH

I can see the logic to this style of pay the lowest debt off first freeing up more money to pay larger debt and creating a sense of getting a handle on debt, however I have three amounts to pay off, the largest of these incurs a monthly fee whereas the other two don't, would you still pay the smallest off first?

sharpe106

I would pay of whichever made sense financially first, does not matter the size. One with highest APR first obviously. What is the monthly fee?

JourneyH

Hiya Sharpe106 it's around the 50 quid mark, the advice I got was conflicting from a support hub, I haven't ever got anything higher than 29.7 APR and plan never to...crossing fingers

sharpe106

It comes down to the maths of the amount involved which works out best. Post a bit more information about each one and I am sure someone can do the maths for you or even better a SOA.

https://www.lemonfool.co.uk/financecalculators/soa.php

boomboomshake

The Dave Ramsey method is smallest to largest regardless of interest rates. Logic being that you stay motivated by knocking out the smaller ones quicker and keep up the momentum. He sees it as a mindset thing not a maths thing. 

Generally the Martin Lewis advise is to go in order of highest interest rate as of course you’ll pay less overall. 

Personally I would do the latter every time. 

ohdearhowdidthathappen

I like the Dave Ramsey steps in general, but don't understand the smallest debt first thing.  Interest rate thing works every time for me.... go for highest interest rate every time, will save money overall

TheAble

Ramsey emphasises that the problem is psychological. The interest rate didn't stop you getting in, so it won't help you getting out. The debt is not the problem - it's a symptom of the problem. In other words, identify what it is within yourself that is causing you to spend excessively - and work on that.

tealady

TheAble said:

Ramsey emphasises that the problem is psychological. The interest rate didn't stop you getting in, so it won't help you getting out. The debt is not the problem - it's a symptom of the problem. In other words, identify what it is within yourself that is causing you to spend excessively - and work on that.

Or you could combine the two schools of thought, get rid of the highest APR 1st whilst looking at what you were spending on (and why)

ZaSa1418

I used a snowball calculator and also an avalanche one and the debt free dates weren't that different. I don't know if that's because all of my debts are relatively similar amounts but i am paying off the one with the highest interest rate at the moment. 
I think seeing a debt come down no matter what will make you feel better.

Andyjflet

I go with Dave Ramsey too, the object being is that you have an issue with debt, those of us in it means we havent managed our money correctly for whatever reason, therefore we need to change our mindset. 
Listing smallest to largest gives quick cans which can be tremendously positive and motivatiing, Quick results. Therefore largest interest first isnt always the best option. 

ryanm8655

boomboomshake said:

The Dave Ramsey method is smallest to largest regardless of interest rates. Logic being that you stay motivated by knocking out the smaller ones quicker and keep up the momentum. He sees it as a mindset thing not a maths thing. 

Generally the Martin Lewis advise is to go in order of highest interest rate as of course you’ll pay less overall. 

Personally I would do the latter every time. 

Have to agree. And breaking down the bigger chunks into smaller goals overcomes the mental side for me.

Personally find it more demoralising if my debt is going to take longer to clear. I like to be doing everything I can.

That said, I can see the merit in it. Particularly if you are someone with lots of creditors and relatively small amounts. In my case they were all £4K+ to start with.