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Snowball your way out of debt

I’ve been fascinated by human behaviour for as long as I’ve been a financial planner. The two go hand in hand in so many ways, because we are physical beings run by our emotions.  Therefore, when it comes to debt repayment, we need to be aware of this because repaying debt won’t happen overnight, and we can easily ‘yo-yo debt’ – pay a little off and put it right back on!

I use a process that’s different to most others when it comes to getting debt-free, because it focuses on making you feel good as you go along your debt repayment journey.

It’s called the Snowball System, because your little decisions initially build to make a big difference.

Don’t be frozen with fear

The first thing you must do is face reality.  We must plan from where we are today, not where we wished we were.  We can’t change the past, but we can make different decisions about our future.  Our past behaviours do not need to reflect our future behaviours, we have a choice.

Get to know your numbers and make a spreadsheet. List for each credit card or loan you have: the amount, the minimum monthly payment and the interest rate.  There’s a free spreadsheet at to help you with this.

Next, try to get the best interest rate you can with each provider. Call them and see if they can reduce the rate you’re paying.

After that, you must find a way to have more coming into your account than going out; you need a surplus at the end of the month. You may have to make sacrifices. Just remember the end goal, and those sacrifices will be more than worth it.

Consolidation is cold comfort

I’m not a fan of debt consolidation (loading all your debts onto one credit card or loan), even if it’s an interest-free arrangement.

By keeping your debts separate, when you pay each one off, you get a win; a feeling of ‘Yes, I did it!’ – we still like praise, even if it’s from our self.

If you consolidate your debts, that win comes so much further down the line. Emotionally, that’s a lot tougher.

All downhill from here

Once you’ve got your spreadsheet, arrange your debts in order from smallest balance first to largest balance last – NOT in order of interest rate.

For each debt, set up a Direct Debit from your bills account to pay off the minimum amount every month, to make sure you’re not incurring any extra fees.

To attack your debt, you pay your snowball – the surplus money you have left over each month – onto the smallest balance first. Your aim is to rapidly and aggressively do whatever it takes to pay that smallest debt off.

Why? To get a quick win and a dopamine boost.  You’ll start feeling good about the process and you’ll be more likely to stay on the plan and not ‘yo-yo’.

Once your smallest balance is gone, congratulate yourself – you’ve achieved something great.

Repeat this and you’ll get rid of your debts one by one, each time feeling that little bit freer.

Search for The Money Planner podcast for more money planning ideas.

Big Save – 5 things you need to know

As the children look forward to their summer holidays, it’s a great time to plan ahead for September.  No doubt plenty of uniforms will need replacing so here are my top tips when it comes to back to school shopping:

  1. Shop early: many of the main high street brands and supermarkets usually run great offers at this time of year – just add a size or two to allow for growth spurts before September!
  2. Shop with a plan: if you think about what you need to buy and stick to it, you’re more likely to spend less.
  3. Shop around: compare prices before buying, which is so quick and simple to do online using sites like
  4. Shop cheaper: check if there are any offers which can save you money from sites such as, and
  5. Shop smart: look at sites such as and to see if they are offering cash back on the items you’re looking to buy.

Take the emotion out of your investing
Preparation is the secret to a happy retirement