What to do when the Debt Avalanche or Debt Snowball methods don’t work for you?

In all the finance blogs I have read, I have never seen anyone address what to do if neither the ‘Debt Snowball’ or ‘Debt Avalanche’ methods work, which was the case for me last year. I had been following the debt snowball method for a couple of years and was making good progress, I was in tune with my finances and knew what was going out and when, and I could, at the time afford all my minimum payments. But I knew my financial situation was going to change in September 2020 with a huge drop in income leaving me in a financial position where I wouldn’t be able to cover the monthly minimum payments on my debts. Six months leading up to this financial change (March 2020) I knew I had to do something completely different.

I listed all my debts, but this time in order of the highest minimum payment to the smallest. This is what my outstanding debt looked like at April 2020.

 Minimum Payment £Balance Outstanding @ April 2020 £
NatWest Loan3824,369.55
Barclaycard Credit Card320.8412,160.16
Tesco Credit Card1105,533.02
MBNA Credit Card1047,233.58

As you can see, although the NatWest Loan had the smallest balance, it was the highest monthly payment. And in total, I had £916.84 going out every month as a MINIMUM. Shocking really and looking back I will never know how I covered it. I always did though. I never missed a payment once, ever.

I did need a new plan so over the next six months from April 2020 to September 2020 I paid as much as I could off the loan and then the Barclaycard. The loan didn’t allow me to make overpayments, so I created a bare bones budget, meal planned every week and saved everything I could in an account until I had enough to pay if off in full. I was able to do this by May 2020 and paid the loan off in full. This then freed up the payment I was making on the loan of £382, thus reducing my total minimum payments on all debt to £534.84.

The next one to attack was Barclaycard and to reduce the minimum payment of £320.84. Again, with a bare bones budget, meals planned, money saved, and de-cluttered items sold, the minimum payment came down to £225.48 by September 2020. When I received my reduced income in September 2020, I only had to find £418.93 for my total debt minimum payments which was a lot more manageable than the original £916.84.

As I write this, March 2021, I am currently still paying off Barclaycard. The minimum monthly payment is £160.47, and the balance is £4113.14. My total debt payments are now £343.37 and I have now switched back to the Debt Snowball method where I am trying to attack Barclaycard with a vengeance!

 Minimum Payment £Balance Outstanding @ March 2021 £Interest Rate %
Barclaycard160.244113.1420
Tesco Credit Card104.005246.9420
MBNA Credit Card79.137798.110

Barclaycard is still the highest monthly payment, as well as one of the highest charging interest accounts and I have completed balance transfers where I can between the three accounts, and this is what I have left to pay. The credit card with the highest balance is at 0 % but that will change at the end of this year. However, I am confident to have Barclaycard paid off so I can tackle the other credit cards before interest is charged again.

I think the moral of my story is this, it’s important to try all the different methods out there if you think they will work for you but be open to doing your own thing if your circumstances change. It’s important to regularly review the methods you’re using and if you anticipate a change in your finances, make sure you leave enough time to adjust your way of working so you don’t come unstuck. Ultimately, if I had not done what I did then I would have been unable to pay the minimum payments and would have had missed payments and possibly CCJ’s on my credit file for several years.

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