Debt Snowball Payoff - Answer I can't find ANYWHERE

[Anonymous]

Hello! I've started the debt snowball factor to finally rid myself of the final debt I have (Thank gosh) 

I've looked EVERYWHERE for this answer, can't find it, and hopefully, someone can help me because I've read so much other good info from here. 

I know the snowball steps and my question is about Step 2. Because I'm not going to be using my CCs any longer my minimum payment will go down (barring interest rate not changing, promotional purchases, etc) over time on those debts 'in waiting'. When those min payments do go down do I then change my monthly payment to match the new min payment and then move the extra $ to the largest amount OR do I continue to make the min payment that I started with? Or does it even matter which route I take - I want to ensure I'm doing what I should be. 

Step 2: Make minimum payments on all your debts except the smallest.

Thanks so much!

[dragontears]

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@Anonymous wrote:

Hello! I've started the debt snowball factor to finally rid myself of the final debt I have (Thank gosh) 

I've looked EVERYWHERE for this answer, can't find it, and hopefully, someone can help me because I've read so much other good info from here. 

I know the snowball steps and my question is about Step 2. Because I'm not going to be using my CCs any longer my minimum payment will go down (barring interest rate not changing, promotional purchases, etc) over time on those debts 'in waiting'. When those min payments do go down do I then change my monthly payment to match the new min payment and then move the extra $ to the largest amount OR do I continue to make the min payment that I started with? Or does it even matter which route I take - I want to ensure I'm doing what I should be. 

Step 2: Make minimum payments on all your debts except the smallest.

Thanks so much!

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Depending upon the amount of debt it doesn't matter that much. Go with whatever is easiest for you. If it is easier to pay a set amount then do it, if you would rather pay the bare minimum then do it. Note: it is frequently recommended to pay more than the minimum to help avoid lenders taking AA on your cards (doesn't prevent it completely but I have heard the theory).

Unsolicited advice: if you are being charged interest make your payments as soon as possible after the statement since most lenders use "average daily balance" method for charging interest. 

[Anonymous]

@dragontears thanks so much! I appreciate the response. I usually do pay more than the minimum anyway so I'm not concerned about AA, but wanted to just get clarification on what was meant. 

I'll always take unsolicited financial advice  

Thank you again! 

[Kforce]

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@dragontears wrote:

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@Anonymous wrote:

Hello! I've started the debt snowball factor to finally rid myself of the final debt I have (Thank gosh) 

I've looked EVERYWHERE for this answer, can't find it, and hopefully, someone can help me because I've read so much other good info from here. 

I know the snowball steps and my question is about Step 2. Because I'm not going to be using my CCs any longer my minimum payment will go down (barring interest rate not changing, promotional purchases, etc) over time on those debts 'in waiting'. When those min payments do go down do I then change my monthly payment to match the new min payment and then move the extra $ to the largest amount OR do I continue to make the min payment that I started with? Or does it even matter which route I take - I want to ensure I'm doing what I should be. 

Step 2: Make minimum payments on all your debts except the smallest.

Thanks so much!

---

Depending upon the amount of debt it doesn't matter that much. Go with whatever is easiest for you. If it is easier to pay a set amount then do it, if you would rather pay the bare minimum then do it. Note: it is frequently recommended to pay more than the minimum to help avoid lenders taking AA on your cards (doesn't prevent it completely but I have heard the theory).

Unsolicited advice: if you are being charged interest make your payments as soon as possible after the statement since most lenders use "average daily balance" method for charging interest. 

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+ 100

[RSX]

agreed with above - do a +$10 above each minimum 

[Anonymous]

Also agreed with the above - minimum +$10 on each of the other cards, and hammer the smallest one with as much as you can each month. When it's wiped, take the same strategy with the next one and work your way through them.

[Curious_George2]

The snowball method is a Dave Ramsey thing, right? I've never consumed his work product but I have a question: since the most financially sound way to reduce debt is to attack the highest-interest obligations first, why does he instead advocate for the costlier snowball method?

[SouthJamaica]

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@Anonymous wrote:

Hello! I've started the debt snowball factor to finally rid myself of the final debt I have (Thank gosh) 

I've looked EVERYWHERE for this answer, can't find it, and hopefully, someone can help me because I've read so much other good info from here. 

I know the snowball steps and my question is about Step 2. Because I'm not going to be using my CCs any longer my minimum payment will go down (barring interest rate not changing, promotional purchases, etc) over time on those debts 'in waiting'. When those min payments do go down do I then change my monthly payment to match the new min payment and then move the extra $ to the largest amount OR do I continue to make the min payment that I started with? Or does it even matter which route I take - I want to ensure I'm doing what I should be. 

Step 2: Make minimum payments on all your debts except the smallest.

Thanks so much!

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1.  You shouldn't make minimum payments, you should pay minimum + $5 or so.

2.  Your minimum payments will go down only ever so slightly, so it really won't matter, but it would be ok to slightly lower the payment to the new minimum + $5.

[203bravo]

It's more for motivation than anything else... the logic is once you see one debt paid in full then you can use the motiviation to keep paying other debts... sort of like a diet when you lose 10 pounds you are more motivated to stick with it.

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@Curious_George2 wrote:

The snowball method is a Dave Ramsey thing, right? I've never consumed his work product but I have a question: since the most financially sound way to reduce debt is to attack the highest-interest obligations first, why does he instead advocate for the costlier snowball method?

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[Curious_George2]

I see. That's reasonable.

I wish the discussions about the "best" way to pay off debt were clearer about the fact that each method is making choices about which dimension(s) to optimize on. If maintaining motivation is the priority, snowball makes sense. If cost-effectiveness is the priority, focus on interest rates. If FICO scores are the priority... it's complicated, so ask the MF community! 😂