Snowballing ??

Konamb212

Not sure if snowballing is the correct term, but I'm hoping some of you may be able to offer some advice.

Current CC debt situation : 

CC1  Limit 10k       Balance £8205     APR 27.9%    Paying £275 p/m (fixed)

CC2 Limit £5200    Bal 4800              APR 19.9%    Paying £130 (fixed)

CC3   Limit £6300    Bal £6150         APR 19.5%      Paying £160 (fixed)

CC4  Limit £4900     Bal £4150         APR 17.9% Paying £100 (fixed)

I have been paying CC1 whatever extra I have, so they usually get slightly more than the £275.

Next month a loan of £105 will be paid off which, from April onwards I will have this amount to deploy to my CC debt.

I've been looking at  a repayment calculator and like the idea that, although CC1 should be getting most of the money, that the rest of the cards could be given a fixed payment that will bring them to a situation where they will be cleared in 4 years. (I like the idea of a definite date/timeframe for debt clearing)

At the moment there are no options for me to transfer any of this debt, but I'm trying to work out if I should pay all of the £105 to CC1 or split it to keep the rest of them in or around 4 years.

If I do split it then CC1 will be cleared before the 4 years so the entire payment at that time  can go to CC2. But if I pay the entire amount then it will be paid long before that again

Is it much the same thing or am I too fixated on the 4 year thing?

Naomim

This is generally the best way to do it, pay the minimums or just above on the lower interest credit cards and throw everything at the highest interest. Once that is cleared move onto the next highest adding the payment you have freed up from the first.

There is a snowball calculator at whatsthecost.com or on lemonfool 

Have you completed an SOA to see if there is anywhere you can shave more money off to add to debt payments?

EimearF

You are too fixated on the 4 year thing. Using a focused snowball method will mean you clear them all faster. Just set the direct debit for the other cards as the minimum not a fixed amount and focus all overpayments at one of your debts. Some say highest interest some say lowest balance so you get a quick win and stay motivated. Once that is done move on to the next one, same approach and you will be debt free soon. 

AbundantBudget

As all of your balances are pretty high and there will be no quick win clearing the smallest one, they all will take significant time to clear, I would concentrate on the highest APR as you planned to do anyway. This method officially called avalanche not snowball, snowball method is starting from smallest balance. For the rest of the balances I would pay minimum plus few pounds to avoid minimum payment marker on your credit file. I personally never stick to one of the methods and mix avalanche and snowball. 

Jamesyb123

Always pay the highest interest first it makes sense 

Konamb212

Naomim said:

There is a snowball calculator at whatsthecost.com or on lemonfool 

Have you completed an SOA to see if there is anywhere you can shave more money off to add to debt payments?

  SOA done - the only extra will be the freed up money from the loan, thanks for the link - may prove useful

EimearF said:

You are too fixated on the 4 year thing.

  Thought I might have been - probably clouding my judgement on the best thing to do.

Thanks for the replies folks, gonna be a signifigant time to clear it all as has been said, but we're moving in the right direction.

Cheers

Naomim

I live the snowball calculator and have it saved as a spreadsheet.  You'll find once the debts start clearing, you may have some 0% offers come in which will shave time off.

Narola1976

There is a fantastic app called Debt Payoff planner which I use and is great. You put all your details in and it will calculate the order of your payments and tell you when you will be debt free. You can choose snowball or avalanche And it will tell you which will take longer. And you update it with your payments as you go along

enthusiasticsaver

I would pay the whole £105 to the highest interest rate debt which is CC1 rather than fixating on a date.  That will be saving you money in the long run and is called the avalanche method as someone else further up thread said.