Martin Lewis "Snowball" trick

I know quite a few people who have used this method. I used it myself to reduce my wife's debt when I first met her.

Apart from paying all the debts off straight away, long term it is the least expensive way to get rid of multiple debts, as it minimises the amount of interest paid, and therefore decreases the total repaid overall.

For the same reason, unless you can get a savings interest rate higher than your highest debt interest rate, it is a better financial decision to use your money to pay off debt than it is to save.

To use my wife's debt as an example: we started by transferring a large part of her credit card debt to a 0% card, then set up a DD to pay the minimum payment on that 0% card, as we knew that that debt would then remain at £xK for 28 months. Then we cleared what was left (at 17.9%), while paying the bare minimum against the overdraft (3%) and mortgage (2.8%).

What my wife had been using to overpay the mortgage we used to clear the expensive portion of card debt, getting rid of that in three months. Then we used the money that had been paid against the card debt (minus the new minimum payment on the 0% card) plus the mortgage overpayments to clear the overdraft (and put measures in place to help avoid using the overdraft again!)

Then we cleared off the mortgage, using the money we weren't putting towards the other, now paid off, debts, but were careful to also make sure we transferred the card debt to another 0% card before the deal ran out!

Once the mortgage was clear (five years early) we paid off the 0% card.

In total, over a seven year period, we payed just over £3000 less than we would have done had we tried to pay the debts off at the same time, largely due to not accruing interest.

Yes this is very true, I don't think this is Martin Lewis' own idea, it's been a 'thing' for wellover 15/20 years I'd say since I first became aware of it.

It works but you must follow it and be strict about not taking on more debt.

You may even find some snowball calculators if you search online.... you put in the details of each debt, what the interest rate and minimum payment are and what amount you can afford to put against the debt and it will calculate how to allocate the payments.

Hi Nicola, sorry to hear you are having difficulties. What worries you about trying this? It’s does sort of seem common sense?

This is definitely a great strategy for paying off debt and for clearing the most expensive debts first. Also, you'll see the amount of interest pay go down more quickly as you pay those down.

I'd also suggest trying to consolidate your debts if you're able -- via a loan from your bank or doing a balance transfer. It's great if you can get one of those 0% deals, even if it's for a short period, because then are you paying down the debt itself rather than the interest.

Here's our story on Netmums about the Snowball Effect and how it works, in case anyone else here is interested.

https://www.netmums.com/life/martin-lewis-shares-snowball-trick-for-clearing-debts-faster

You can also get help on our Money Matters board. We've partnered up with Stepchange, the debt charity, and they'll be popping onto the board and answering as many questions as they can, so post yours here:

https://www.netmums.com/coffeehouse/money-advice-1127/money-matters-1133/

Tell us how you get on and what you're planning.

Great tip, Eve!

If you haven't got your own house with equity, then look into an IVA. My daughter had anIVA & when she lost her job & couldn't make the payments, her debt was written off