{"id":1618,"date":"2021-05-26T19:24:59","date_gmt":"2021-05-26T13:54:59","guid":{"rendered":"https:\/\/www.extramilefinance.uk\/blog\/?p=1618"},"modified":"2021-05-26T19:27:15","modified_gmt":"2021-05-26T13:57:15","slug":"should-you-use-the-debt-snowball-method","status":"publish","type":"post","link":"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/","title":{"rendered":"Should You Use the Debt-Snowball Method?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_52 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e2df8025340\"><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e2df8025340\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#6_Steps_for_Using_the_Debt-Snowball_Method\" title=\"6 Steps for Using the Debt-Snowball Method\">6 Steps for Using the Debt-Snowball Method<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#%E2%97%8F_Make_a_Budget\" title=\"\u25cf&nbsp;&nbsp;&nbsp; Make\na Budget\">\u25cf&nbsp;&nbsp;&nbsp; Make\na Budget<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#%E2%97%8F_Enlist_the_Debts\" title=\"\u25cf&nbsp;&nbsp;&nbsp; Enlist\nthe Debts\">\u25cf&nbsp;&nbsp;&nbsp; Enlist\nthe Debts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#%E2%97%8F_Set_Up_Minimum_Repayments\" title=\"\u25cf&nbsp;&nbsp;&nbsp; Set\nUp Minimum Repayments\">\u25cf&nbsp;&nbsp;&nbsp; Set\nUp Minimum Repayments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#%E2%97%8F_Start_Paying_Off_the_Lowest_Debt\" title=\"\u25cf&nbsp;&nbsp;&nbsp; Start\nPaying Off the Lowest Debt\">\u25cf&nbsp;&nbsp;&nbsp; Start\nPaying Off the Lowest Debt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#%E2%97%8F_Track_the_Progress\" title=\"\u25cf&nbsp;&nbsp;&nbsp; Track\nthe Progress\">\u25cf&nbsp;&nbsp;&nbsp; Track\nthe Progress<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.extramilefinance.uk\/blog\/should-you-use-the-debt-snowball-method\/#%E2%97%8F_Keep_Repeating_and_Compare_Options\" title=\"\u25cf&nbsp;&nbsp;&nbsp; Keep\nRepeating and Compare Options\">\u25cf&nbsp;&nbsp;&nbsp; Keep\nRepeating and Compare Options<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p>The debt-snowball method of repayment is one of the most\ntrending approaches used by borrowers. It implies clearing smaller repayments\nfirst and the larger ones at last. Unfortunately, the traditional method\nimplies clearing larger debts at first.<\/p>\n\n\n\n<p>By clearing larger debts, borrowers would pay less interest and\neven repay the amount before the due date. Moreover, it also helps to increase\nhousehold savings and accrue interest through a savings account.<\/p>\n\n\n\n<p>Therefore, the additional savings can prove beneficial in\nclearing other debts or repaying a large one. Meanwhile, the debt-snowball\nmethod only provides a sense of satisfaction for repayment and diminishes the\ncurrent expenditure.<\/p>\n\n\n\n<p>Unfortunately, the debt-snowball method can prove costly to buyers as it will take a long term to complete small debts. Therefore, the interest accrued on the amount lasts for a longer tenure than usual.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_Steps_for_Using_the_Debt-Snowball_Method\"><\/span>6 Steps for Using the Debt-Snowball Method<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"%E2%97%8F_Make_a_Budget\"><\/span>\u25cf&nbsp;&nbsp;&nbsp; Make\na Budget<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Budgeting is one of the best practices to become debt-free. It\nenables a person to learn about ongoing used and unused expenses. Additionally,\nit helps in making changes to the current expenses.<\/p>\n\n\n\n<p>It is also true that budgeting can make a person healthy. For example, it will reduce eating from outside and having a healthy homemade meal. Moreover, there are two significant methods of budgeting. These include the zero-sum and 50\/20\/30 rules.<\/p>\n\n\n\n<p>According to a source, the zero-sum budgeting method involves\nsubtracting the expenses from the income and getting a zero amount. It means\nyou have nothing left in the bank to make more payments or savings. However,\nthe method helps in becoming debt-free fast.<\/p>\n\n\n\n<p>Optionally, the 50\/20\/30 rule implies 50% of income goes for\nfixed expenses, 20% for financial goals, and 30% for variable expenses. The\nflexible expenses include movies, eating out, hobbies, etc.<\/p>\n\n\n\n<p>On the other fixed expenses consist of utilities like gas and\nelectricity, mortgage or rent, insurance, etc. By building a budget using any\nof these methods, you can easily pay off using the debt snowball method.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"%E2%97%8F_Enlist_the_Debts\"><\/span>\u25cf&nbsp;&nbsp;&nbsp; Enlist\nthe Debts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As mentioned earlier, the debt-snowball method involves paying\noff smaller debts first and the larger ones at last. Therefore, you should\nstart enlisting the debts in the same manner or arrange them after enlisting.<\/p>\n\n\n\n<p>Unfortunately, many loans have a high interest rate. According to the traditional methods, paying the debt with the highest rate would be important. However, you can change the APR by moving the debt to a zero-interest promotion credit card.<\/p>\n\n\n\n<p>By doing so, you would no longer accrue interest on existing\ndebts until the promotional tenure expires and make regular repayments.\nMoreover, using the debt-snowball method would become much easier with a single\nrepayment plan.<\/p>\n\n\n\n<p>Unfortunately, transferring the entire debt to a zero-interest\ncredit card would also accrue higher repayments to clear the debt in a short\ntime. Optionally, you can take <strong><a href=\"https:\/\/www.extramilefinance.uk\/loans\/doorstep-loans.html\">loans that\ncome to your home<\/a> <\/strong>and make repayments to lower the existing\ndebts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"%E2%97%8F_Set_Up_Minimum_Repayments\"><\/span>\u25cf&nbsp;&nbsp;&nbsp; Set\nUp Minimum Repayments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The best way to avoid late payment charges and avoid accruing\nmore debt is by setting up automated minimum repayments. The best practice\nwould involve doing this step at the earliest because it may take time for\napproval or status information.<\/p>\n\n\n\n<p>However, you should be aware that minimum repayments come with\na cost. They continue to grow debt overhead for a long tenure. Therefore,\npaying more than the minimum repayments would prove beneficial.<\/p>\n\n\n\n<p>Unfortunately, if you follow the debt-snowball method and make\nminimum repayments, the interest could become high. For example, if you have a\n\u00a35,000 and a \u00a31,000 with an APR of 24.9%. <\/p>\n\n\n\n<p>Repaying \u00a3200 plus minimum will take two years and an\nadditional \u00a31,047 in interest for \u00a35,000 debt. Also, clearing the \u00a31,000 with\nthe same arrangement would accrue \u00a355 as interest. <\/p>\n\n\n\n<p>On the other hand, the debt-snowball method would take 19 years\nand four months for clearing the \u00a31,000 debt. Likewise, the \u00a35,000 debt would\nclear in 32 years and eight months. The former and latter would accrue \u00a31,655\nand \u00a39,135 as interest.<\/p>\n\n\n\n<p>Therefore, before going ahead with the debt-snowball method,\nmake sure to evaluate the length of the debt cycle. Also, think whether the\nminimum repayment would prove useful over the long term.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"%E2%97%8F_Start_Paying_Off_the_Lowest_Debt\"><\/span>\u25cf&nbsp;&nbsp;&nbsp; Start\nPaying Off the Lowest Debt<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After sorting the debts to include in the debt snowball method\nand managing the budget, it is time to start paying off the lowest debt. At\nthis point, the best practice would involve creating a secondary mode of\nincome.<\/p>\n\n\n\n<p>The temporary phase of working a second job even after a hard\nfirst job would help to cover more repayments. Additionally, it will help to\nincrease the amount in the savings account and accrue yearly interest.<\/p>\n\n\n\n<p>Besides this, you can add more money to the 50\/20\/30 rule of\nbudgeting. It means you would have additional income, especially covering 30%\nof variable expenses like hobbies, subscriptions, etc.<\/p>\n\n\n\n<p>A few prominent earning a second income is by doing a part-time\njob, renting a space, selling unused products, etc. As per the debt-snowball\nmethod, paying off the lowest debt would keep clearing debts and keep bringing\nthe next ones forward.<\/p>\n\n\n\n<p>So, a second or passive income would cover the minimum debt\nexpenditures while the savings get depreciated. However, transferring the debt\nto a zero-interest credit card would make it much easier to repay.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"%E2%97%8F_Track_the_Progress\"><\/span>\u25cf&nbsp;&nbsp;&nbsp; Track\nthe Progress<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The debt-snowball method helps to reduce household expenses.\nTherefore, it is crucial to track the progress. Additionally, it is necessary\nto stop payments for cleared debts. Over-paying a debt may require following\nthe refund procedures.<\/p>\n\n\n\n<p>Moreover, tracking the progress would keep you motivated and\nopen doors for new investment opportunities. The best method of tracking is\nthrough an excel sheet or an online calculator. The assessment would help to\nlearn about the tenure left for clearing the existing debt and amount.<\/p>\n\n\n\n<p>At this point, you can determine the need for <strong><a href=\"https:\/\/www.extramilefinance.uk\/loans\/12-month.html\">12 month loans from direct lenders<\/a> for bad credit <\/strong>to manage expenses. Moreover, the debt calculator would estimate the time a borrower becomes debt-free.<\/p>\n\n\n\n<p>Therefore, the income earned would help cover fixed expenses\nand eliminate large costs for the household. Becoming debt-free would also\neliminate the need for credit cards and additional loans. Additionally, it\nwould improve the credit score.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"%E2%97%8F_Keep_Repeating_and_Compare_Options\"><\/span>\u25cf&nbsp;&nbsp;&nbsp; Keep\nRepeating and Compare Options<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>One of the biggest competitors of the debt-snowball method is debt-avalanche. It requires covering the debts with large interest rates at first. Therefore, it is entirely the opposite of the debt-snowball method.<\/p>\n\n\n\n<p>The debt-avalanche method requires ignoring the account\nbalance. Also, research suggests that the debt-snowball method motivates more\npeople. Meanwhile, the debt-avalanche method helps in saving more money.<\/p>\n\n\n\n<p>According to a source, repaying large interest rate loans helps\nto save more in the long term. Moreover, it leads to lower loan repayments as\nit enlisting debt from the highest to the lowest. But, additionally, it does\nnot mean that either of the methods would match everyone\u2019s expectations.<\/p>\n\n\n\n<p>The method of repaying the debt would differ based on the type of borrowing. For example, a person with a mortgage would incur large costs through the long-term approach. Therefore, covering such expenses is more important than others.<\/p>\n\n\n\n<p>Besides this, a government or enlisted private financial\nadvisor can help manage finances, diminish expenses, and increase savings.\nTherefore, taking advice from an expert even at an additional cost would prove\nmuch more worthwhile.<\/p>\n\n\n\n<p>After following these six steps, you can easily determine\nwhether the debt-snowball method is useful for you or not. Also, the budgeting\nmethods would put you at ease at managing household costs.\n\n\n\nIf the debt recovering methods don\u2019t help cover\nthe existing costs, you can avail of <strong><a href=\"https:\/\/www.extramilefinance.uk\/loans\/bad-credit-loans\/installment.html\">personal\ninstallment loans<\/a><\/strong> or other options. \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The debt-snowball method of repayment is one of the most trending approaches used by borrowers. It implies clearing smaller repayments [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1619,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2,161,165],"tags":[25,213,184,214],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts\/1618"}],"collection":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/comments?post=1618"}],"version-history":[{"count":2,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts\/1618\/revisions"}],"predecessor-version":[{"id":1621,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts\/1618\/revisions\/1621"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/media\/1619"}],"wp:attachment":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/media?parent=1618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/categories?post=1618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/tags?post=1618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}