Snowballing or Snowflaking??
When it comes to tackling debt in the aftermath of a harsh financial climate, not to mention a pretty frosty actual climate, these two terms seem particularly apt. So, what is actually meant by snowballing and snowflaking your debt?
Firstly, ‘snowballing’ starts with looking at all of your different debts and prioritising them according to your circumstances. Whether you decide to start with the largest debts and work your way to the smallest or vice versa depends upon your debts and your point of view. On one hand, clearing away those small debts has the psychological benefit of seeing real progress. You get the sense of satisfaction that comes from clearing off a debt and then cutting up the credit card.
Tackling the largest debts first probably makes more mathematical sense and is often the one recommended by debt advisors as those are the ones that will be charging you the most interest. As everyone’s situation is different, there is no steadfast rule that will work for everyone, just as there is no debt solution that suits everyone. So, deciding between the smallest amount and the highest rate of interest is something that you should discuss with an impartial debt advisor.
Regardless of which end of the scale you start with, pay the minimum to the rest and throw everything you can at the target debt. Keep paying as much as you can as the debt comes down and the debt will reduce faster and faster, or ‘snowball’. Once you’ve paid it off, move the tactic to the next debt on the list and pay as much as you can towards that. Snowballing is all about momentum. As the debt is reduced, the interest is reduced but provided you keep the payment as high as possible, more goes to actually paying off the debt, rather than paying the interest.
Snowflaking, as it sounds, is less about the gathering of momentum and all about little and often. So, make any payment you can, no matter how small it is, whenever you can. You keep up with the minimum payments on all of your debt but target that one, as you would with snowballing, for constant chipping away, or flaking. Get it? Naturally, all of these snowflakes combine to make a snowball that keeps rolling on to the next debt as you pay the last one off.
As long as you’ve got a system and you’re sticking to your task, whether you snowball or snowflake is up to you. It’s all about making a speedy recovery from financial ill-health. Visit www.debtsolver.co.uk for a free, no obligation financial health check-up. A dedicated debt advisor will be able to offer guidance on the best debt solution to suit your circumstances.
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