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The simplest, most psychologically effective way to get out of debt. It trades mathematical optimality for momentum, and momentum is what actually works.
The avalanche method (paying highest interest first) is mathematically optimal. The snowball method (smallest balance first) is psychologically optimal. Research consistently shows that people who use the snowball method clear their debt faster, because they actually stick to it.
Paying off a small debt gives you a win. Wins create momentum. Momentum gets you to the finish line.
Credit cards, buy-now-pay-later, overdraft, personal loans. Write the balance and minimum payment for each one. Don't include your mortgage. That's separate.
Every single debt gets its minimum payment. This keeps the interest from spiralling and protects your credit score.
Any extra money goes entirely towards the smallest debt. Even £10 extra a month makes a difference. You're not trying to be clever. You're trying to build momentum.
When the smallest debt is gone, take everything you were paying on it and add it to the next smallest. Your 'snowball' gets bigger with every debt you clear.
The snowball effect compounds. The more debts you clear, the faster the remaining ones fall.
Once you're debt-free (or down to just a mortgage), every pound you were paying in debt is now yours to invest. This is where wealth-building starts.
| Debt | Balance | Min. payment | Attack order |
|---|---|---|---|
| BNPL (Klarna) | £180 | £30 | 1st 🎯 |
| Credit card | £1,200 | £35 | 2nd |
| Personal loan | £3,500 | £120 | 3rd |
| Car finance | £8,000 | £180 | 4th |
Any extra money (say £100/month) goes entirely to the Klarna debt first. When it’s gone, that £130/month (£30 min + £100 extra) hits the credit card. And so on.