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Question regarding snowballing

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Established Member

Question regarding snowballing

For those that have done the snowball effect when paying off debt did you pay the absolute minimums on other cards to pay the absolute most to the smallest balance?

I just paid off my first smallest balance but now my next balance is $1100. Trying to figure out if I should just pay the minimums or pay minimums with $10 and put the rest to that next smalled balance.

 

Thanks in advance

Amazon: 2000
Amex: 1,000
Amex: 2,000
Best Buy: 3,500
BOA: 5100
Care Credit: 12000
CCU: 5,000
Citi: 4,200
Disc: 3,500
Nordstrom: 500
Paypal: 2000
Suntrust: 2,800
WF: 5,000
Message 1 of 11
10 REPLIES 10
Established Member

Re: Question regarding snowballing

 minActual paymentBefore paymentafter paymentcredit limitdueutil
Amazon0000800 0%
Amex0350350010002/7/20190%
Amex35501150110013002/15/201985%
Best Buy271001500140035002/7/201940%
BOA155221.825021.824800100002/23/201948%
CareCred00007500 0%
CCU701403440330050002/12/201966%
Citi501003200310042002/20/201974%
Discover35501650160030002/2/201953%
Nordstrom0000500 0%
Paypal00002000 0%
Suntrust38501850180028002/8/201964%
WF36503400335050002/21/201967%

 

Here is my plan of action for this month. Some of which have been paid already.

 

I also have 2 car loans one is 586/month and the other is 284/month, child support of $500/month and student loans of $147/month.

 

I pull in roughly $3300-3500/month working two jobs. Other expenses throughout the month come out to rougly $300-400

Amazon: 2000
Amex: 1,000
Amex: 2,000
Best Buy: 3,500
BOA: 5100
Care Credit: 12000
CCU: 5,000
Citi: 4,200
Disc: 3,500
Nordstrom: 500
Paypal: 2000
Suntrust: 2,800
WF: 5,000
Message 2 of 11
Senior Contributor

Re: Question regarding snowballing

I would pay the minimum on all then apply everything else to either the smallest balance to knock it out or to the the card with the highest APR.   If the interest rates are basiclly the same go with the smallest balance, but if your smallest balance has a low rate you might be better off paying off the highest rate first. 

 

And of course don't use your cards while you are trying to get rid of your debt. 


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Message 3 of 11
Super Contributor

Re: Question regarding snowballing


@Rjames18 wrote:

For those that have done the snowball effect when paying off debt did you pay the absolute minimums on other cards to pay the absolute most to the smallest balance?

I just paid off my first smallest balance but now my next balance is $1100. Trying to figure out if I should just pay the minimums or pay minimums with $10 and put the rest to that next smalled balance.

 

Thanks in advance


Depends on what your goal is.  If your goal is to pay off your debt as soon as possible, then yes... make minimum payments everywhere and add as much as possible to smallest balance.

 

If your goal is to pay the least amount of interest possible, we'll need you to list APRs on each account.

 

If Fico score is your priority, we'll suggest a different strategy all together.

 

I'm assuming that your goal is to pay off your debt as quickly as possible... if I am correct, then you only need to make the minimums every where else while you maximize your payment on the smallest balance.

 

Hope this helps!

01/01/20 Fico 8: EX 711, EQ 712, TU 724.
01/05/20 Fico 9: EX 678, EQ 691, TU no idea...

Zero percent financing is where the devil lives...
Sitting in the garden behaving myself. #noinqs2020
Message 4 of 11
Established Member

Re: Question regarding snowballing

Thank you for the replies!

 

Yes my goal is to pay off as soon as possible.

I'm worried about AA though from only paying the minimums.


The only cards with interest right now are the BOA at 24.9% and CCU at 13% IIRC

Amazon: 2000
Amex: 1,000
Amex: 2,000
Best Buy: 3,500
BOA: 5100
Care Credit: 12000
CCU: 5,000
Citi: 4,200
Disc: 3,500
Nordstrom: 500
Paypal: 2000
Suntrust: 2,800
WF: 5,000
Message 5 of 11
Super Contributor

Re: Question regarding snowballing


@Rjames18 wrote:

Thank you for the replies!

 

Yes my goal is to pay off as soon as possible.

I'm worried about AA though from only paying the minimums.


The only cards with interest right now are the BOA at 24.9% and CCU at 13% IIRC


...then you're spending too much time on myfico.  Smiley Very Happy

 

Make the minimum payments on time, and you have nothing to worry about. 

01/01/20 Fico 8: EX 711, EQ 712, TU 724.
01/05/20 Fico 9: EX 678, EQ 691, TU no idea...

Zero percent financing is where the devil lives...
Sitting in the garden behaving myself. #noinqs2020
Message 6 of 11
Contributor

Re: Question regarding snowballing

if you are only paying the minimum on 0% offers, I think the banks prefer you pay the minimum so they bank off the interest when the period ends. if you are correct, that is $12350 debt at 0%. if it were me, I would be having a fire sale to pay off those cards before then.

 

at 25% APR you are paying about $20 in interest per $1000 per month, ~$100 for bofa.
at 13% APR you are paying about $11 in interest per $1000 per month, ~$37 for ccu.


your fixed payments are $1517 and you say your other expenses are 3-400, but we will just call it $500 because...life. so $2000 leaves you $13-1500 towards credit cards monthly.


you could:


o pay off the $12350 at 0% in a year (assuming you have a year).
o pay off the interest cards and take your chance when that interest that hits on the other cards.
o pay off the disco then take a BT offer for 0% to extend some of the other balances at 0% (3% fee).
o etc...

Message 7 of 11
Frequent Contributor

Re: Question regarding snowballing

The only way it makes mathmatical sense to pay extra (above the minimum) on the 0% interest rate cards instead of the 25% interest rate card is if the 0% cards are going to increase to such a high rate that the gains you make now will be offset by what you pay later. But that seems unlikely.

 

So take advantage of the 0% rate now, and pay down the card you have to pay 25% on nowThat is the path to paying everything off the soonest (and with the least interest).

 

The only exception to this is if you need the motivation of seeing the first few cards paid off. That is the reason (and really the only valid reason) that some suggest paying down your smallest balance first -- that you're able to see the progress as you pay those lower balance cards off, and it encourages you to keep at it. If that helps you, then by all means, pay those first.

Message 8 of 11
Super Contributor

Re: Question regarding snowballing

I agree with Plip.  Attacking higher interest cards before lower interest cards is mathematically the fastest way to get all debt paid off.  The Snowball method has a psychological advantage in that it can give the debtor a huge feeling of encouragement as each card is zeroed out.  But Snowball is about feelings -- not a method that causes debt to get paid off faster, unless the happy feelings cause you to make greater commitments to debt reduction as time goes on.

 

The only caveat I'd make is that I'd never make only the minimum payment, simply because making only the MP is statistically highly associated with risk.  Increasing your risk perception increases the chance that you will be balance chased or have some other sort of adverse action taken against you.  So I would pay $2 more than the MP on every card, and then dump the remainer on the highest interest cards.

 

Another slight tweak might be to prioritize getting all cards to under 68%, which will also further lower your perception of risk.

Message 9 of 11
Established Member

Re: Question regarding snowballing


@CreditGuyInDixie wrote:

I agree with Plip.  Attacking higher interest cards before lower interest cards is mathematically the fastest way to get all debt paid off.  The Snowball method has a psychological advantage in that it can give the debtor a huge feeling of encouragement as each card is zeroed out.  But Snowball is about feelings -- not a method that causes debt to get paid off faster, unless the happy feelings cause you to make greater commitments to debt reduction as time goes on.

 

The only caveat I'd make is that I'd never make only the minimum payment, simply because making only the MP is statistically highly associated with risk.  Increasing your risk perception increases the chance that you will be balance chased or have some other sort of adverse action taken against you.  So I would pay $2 more than the MP on every card, and then dump the remainer on the highest interest cards.

 

Another slight tweak might be to prioritize getting all cards to under 68%, which will also further lower your perception of risk.


Okay I do believe this would be the best way. I've changed up to where I'll be making $2 more than the minimums except for the BOA where I will put all the rest of the money I can.

I did have amex do AA when I changed from making $100/month payment to $50/month payments.

 

I also have $4k sitting my savings that I could use. I would rather save for a rainy day fund though

Amazon: 2000
Amex: 1,000
Amex: 2,000
Best Buy: 3,500
BOA: 5100
Care Credit: 12000
CCU: 5,000
Citi: 4,200
Disc: 3,500
Nordstrom: 500
Paypal: 2000
Suntrust: 2,800
WF: 5,000
Message 10 of 11
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