Why I choose the debt snowball method?

Hello budgeting buddies!

I thought I would write a post as to why I chose the debt snowball as my personal debt payment method instead of the other main overarching method of the debt avalanche. Just so you know my reasoning for it, especially if you are still in the process of choosing your debt paying journey.

Choosing to utilise the debt snowball method, occurred for multiple reasons. The first reason being that I like simplicity.

The debt snowball is an easy concept, and to be honest, I am lazy. With the debt snowball you don’t need to use math or looking deep into your debt. There is no looking at interest rates or going into decimals to see which one the smaller interest rate is.

For my personal circumstances, most of my debts are not interest bearing. So, when I get to the 0% interest rate accounts, I would be doing the debt snowball anyway.

My second most important reason behind choosing the debt snowball is that I like easy wins. All my debts are above £1,000, which I would rather be rid of before tackling the large £36,000 monster of a student loan.

I tend to get easily distracted; I need something to keep me motivated and focused. The first debt is going to take me a few months to pay regardless, which compared to the few years its going to take me to pay my student loans, is my first “easy win”.  

Whilst I am working on the distractedness, I still need to set myself up for the easiest life that I can with the least amount of stress. Weirdly enough, the more stressed I am, the more I binge, and the more I get distracted. Whilst never on anything overly expensive, however a thousand cuts to the budget is my way of ensuring I stay broke. Another thing I am working on!

The third reason is that my current income is fixed, however, this is going to change, as I yet do not have a job lined up. So, I need to pay as much as I can pay to debt before my life gets uncertain. I would like to get rid of as many debt accounts that I can, because my income later, will become far less stable. I would rather only have one debt to deal with instead of four, when the time comes.

If I used the debt avalanche, I would still be paying on all my debts when my income becomes questionable. Having to deal with more people when in an uncomfortable and stressful situation, doesn’t sound like a place I would want to be in.

Having less debt accounts, sets my mind to rest. In contrast, the debt avalanche would still leave me with more open accounts after I have changed jobs.

The debt avalanche is sold to people to “save money” in terms of interest rate and time. However, I did the math to incorporate my numbers when I was trying to decide on which method to use, and it didn’t save me a lot of time or money.

I used an amazing website to help me with this analysis called undebt.it.  It takes all debts, minimum payments, budget for paying off debt and interest rates and shows you how much it will cost you in time and money depending on your payment method. It informed me that while the debt avalanche “wins”, but only by two months, and £1,000 in interest.

Considering my world is going to get very complicated and I will potentially not be able to continue paying on my debts for a while, in the midst of changing jobs and countries, I would rather lose £1,000 and ensure I only fail to pay one company for a small amount of time than be owing to multiple companies which may cause me further issues in the future.  

I would highly recommend running your numbers, and then add in your own personal circumstances of affordability, potential life changes and comfort level. Personal finance is personal for a reason.

Lastly, the debt snowball is incredibly well known and has support groups online. This is important to me, (even if I don’t contribute) as I find the people succeeding keeps me on track.

While the avalanche may save you money in terms of interest and time, it won’t for me in a huge life altering way. The peace of mind of getting rid of most accounts “quickly” is worth so much more than £1,000.

At the end of the day, paying off debt is a wonderful thing. Paying down on one account at a time (regardless of interest rate/ amount owed), is the BEST way to pay down debt. However, I am using the snowball as its easy as paying debt is easy to organise, and less math being involved, and lots of easy wins.

Thank you for reading! Much love to you all!

Comment time questions:

Which debt method you are using?

And why?

Hello budgeting buddies!

I thought I would write a post as to why I chose the debt snowball as my personal debt payment method instead of the other main overarching method of the debt avalanche. Just so you know my reasoning for it, especially if you are still in the process of choosing your debt paying journey.

Choosing to utilise the debt snowball method, occurred for multiple reasons. The first reason being that I like simplicity.

The debt snowball is an easy concept, and to be honest, I am lazy. With the debt snowball you don’t need to use math or looking deep into your debt. There is no looking at interest rates or going into decimals to see which one the smaller interest rate is.

For my personal circumstances, most of my debts are not interest bearing. So, when I get to the 0% interest rate accounts, I would be doing the debt snowball anyway.

My second most important reason behind choosing the debt snowball is that I like easy wins. All my debts are above £1,000, which I would rather be rid of before tackling the large £36,000 monster of a student loan.

I tend to get easily distracted; I need something to keep me motivated and focused. The first debt is going to take me a few months to pay regardless, which compared to the few years its going to take me to pay my student loans, is my first “easy win”.  

Whilst I am working on the distractedness, I still need to set myself up for the easiest life that I can with the least amount of stress. Weirdly enough, the more stressed I am, the more I binge, and the more I get distracted. Whilst never on anything overly expensive, however a thousand cuts to the budget is my way of ensuring I stay broke. Another thing I am working on!

The third reason is that my current income is fixed, however, this is going to change, as I yet do not have a job lined up. So, I need to pay as much as I can pay to debt before my life gets uncertain. I would like to get rid of as many debt accounts that I can, because my income later, will become far less stable. I would rather only have one debt to deal with instead of four, when the time comes.

If I used the debt avalanche, I would still be paying on all my debts when my income becomes questionable. Having to deal with more people when in an uncomfortable and stressful situation, doesn’t sound like a place I would want to be in.

Having less debt accounts, sets my mind to rest. In contrast, the debt avalanche would still leave me with more open accounts after I have changed jobs.

The debt avalanche is sold to people to “save money” in terms of interest rate and time. However, I did the math to incorporate my numbers when I was trying to decide on which method to use, and it didn’t save me a lot of time or money.

I used an amazing website to help me with this analysis called undebt.it.  It takes all debts, minimum payments, budget for paying off debt and interest rates and shows you how much it will cost you in time and money depending on your payment method. It informed me that while the debt avalanche “wins”, but only by two months, and £1,000 in interest.

Considering my world is going to get very complicated and I will potentially not be able to continue paying on my debts for a while, in the midst of changing jobs and countries, I would rather lose £1,000 and ensure I only fail to pay one company for a small amount of time than be owing to multiple companies which may cause me further issues in the future.  

I would highly recommend running your numbers, and then add in your own personal circumstances of affordability, potential life changes and comfort level. Personal finance is personal for a reason.

Lastly, the debt snowball is incredibly well known and has support groups online. This is important to me, (even if I don’t contribute) as I find the people succeeding keeps me on track.

While the avalanche may save you money in terms of interest and time, it won’t for me in a huge life altering way. The peace of mind of getting rid of most accounts “quickly” is worth so much more than £1,000.

At the end of the day, paying off debt is a wonderful thing. Paying down on one account at a time (regardless of interest rate/ amount owed), is the BEST way to pay down debt. However, I am using the snowball as its easy as paying debt is easy to organise, and less math being involved, and lots of easy wins.

Thank you for reading! Much love to you all!

Comment time questions:

Which debt method you are using?

And why?

If you are comfortable. And how much debt do you owe? I’m curious, to see where everyone is starting and how everyone else’s journey is going?

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