Pay off debt by Snow Balling Payments? What is the snowball method?

Like me, are you sick and tired of your debt? Sick of that feeling that its holding you back? Fed up of your credit score constantly fluctuating between bad and very bad? Well its time to take control of your finances and become Debt Free


You’ve sat down and really looked at your finances, worked out all the places / people you owe money too and now your ready to start paying it off and working towards being debt free!


But how do you take that next step and start paying off the money you owe? How do you decide who to pay? When? & how much?

Snowballing your debts

Let’s dive right into it and take a look at what is called Snow Balling


Imagine you are at the top of the hill and in your hand you have a snowball. As you move down the hill you have your debts. You start at the top and roll the Snow Ball down the hill.


As it progresses down the hill it grows larger, This is your monthly Payments!


It starts at the top of the hill with us paying the minimum payments but as we get further along that snowball grows and the payment to the next debt grows larger! As we pay each debt off we then use the previous debts monthly payment towards the next one and so on until we have no debts left


Lets say we have 4 debts and each one is a £25 monthly payment! Debt A is a 1 year term, Debt B 2 year, Debt 3 3 year & Debt 4 4 year term. We start by paying each debt the £25 payment but when Debt A is done at the end of Year 1 we take that £25 and add it to Debt B!


Now we are paying Debt B £50, Debt C £25, Debt D £25! Debt B will now only take 6 months to clear as opposed to a further year and once paid off we repeat with Debt C taking the £50 and adding it to the £25 to make £75 to Debt C. We repeat this until we have cleared all debts.


Working out your payments for each creditor

You need to first start by creating a budget! One that looks at every thing and really gives you a clear picture of what you have left each month after all your essential and non essential out goings


There is honestly nothing worse than working hours and hours each month, missing time with your child & then at the end of it all paying all your priority bills & debts while leaving your self little to nothing to live on or enjoy life with your loved ones


So let’s snowball our debts and work towards owing nothing giving us more money for our self each month


As a True example of this I have listed below my current debts, the term of these debts along with the interest being paid, and finally the amount at which I am paying these debts off per month


Debt A

Loan Amount: £794

Monthly Payment: £10

Term: 6 years 7 months

Interest: N/A


Debt B

Loan Amount: £490

Monthly Payment: £10

Term: 4 years 1 month

Interest: N/A


Debt C

Loan Amount: £250

Monthly Payment: £25

Term: 10 months

Interest: 29.5% APR


Debt D

Loan Amount: £250

Monthly Payment: £25

Term: 10 months

Interest: 34.9% APR


Debt E

Loan Amount: £832

Monthly Payment: £25

Term: 2 Years 10 Months

Interest: N/A


Debt F

Loan Amount: £682

Monthly Payment: £25

Term: 2 years 4 Months

Interest: N/A


Debt G

Loan Amount: £2501.39

Monthly Payment: £55.58

Term: 4 Years

Interest: 19.9%


Total Debt Amount: £5799.39

Total Monthly Payments: £175.58

Longest Term: DEBT A

Shortest Term: DEBT C / D

Highest Interest: DEBT D

Lowest Interest: DEBT A / B / E / F


We now have all the figures we need to start Snow Balling our debt!


How will I be Snowballing my debts down?

Snowballing is the process in which we will be paying off our debts. For myself I'm starting with 7 Outstanding Debts and I will be paying the minimum / set amount for each one of these debts per month


If I have a relatively comfortable amount of spare money at any given month i will pay a bit extra towards the debts this will be done by starting with the debt with the highest interest! For me DEBT D has the highest rate of interest at 34.9% therefor i would like to pay this one off first!


As we can see from the information above with just the minimum payments DEBT D would take 10 months to pay off (bare in mind this is on the current minimum payments and these may change as I get more hours / pay rises at work). We would look to pay this off faster where possible!


But lets say we take the Full 10 months, once we have paid off this debt the £25 we have been using for this debt would then be put towards the next debt! From my debts we can see that both DEBT C & D would be paid off in 10 months therefor we would then take that £50 and place it towards payments of the next debt starting again with the highest rate of interest which is DEBT G


6 Years to Pay off my debt? The Goal?

As we can see from my own personal debts its going to take around 6 years to pay off DEBT A but that's not the goal we have in mind! We will be looking to become DEBT FREE in 2022! Ill be documenting each payday each month with my budget for the month, where I will be putting my money, current debt totals and any additional we have paid off any debts!


Ill also be showing you how to create your own budget in which you have everything that could possible crop up! The worst thing is when you budget for what you believe is everything and then something comes up and the next minute your back to square one borrowing money to get by


I want to show you that even in a single or low income household you can achieve debt freedom in a short space of time through snowballing, paying a bit extra when affordable and by creating a budget that will work for you!


The importance of Side Hustles.

I've mentioned it before but one thing we will be doing to supplement our income and give us even more chance of becoming debt free in a year is to add side hustles into our life! We will soon be starting the Side hustle challenge for this year in which we will take a small amount of money affordable to most people around £100 - £200 and with this will create additional income streams to hit our goal of £2000 income per month


This is something that you can follow along with, add these new income streams to your life and create an additional income source too


If you want to start adding an additional income into your life immediately I have put together a list of 20 side hustles you can literally start right now HERE We also have an in depth guide HERE on how to start Matched Betting & make £300+ extra per month to supplement your income