The Cost of Living Crisis
Eloise Hill
Content writerIf you have debts in multiple places, this could really help you
Money saving expert Martin Lewis has shared a trick for clearing debts faster, using a method called the 'snowball' technique.
Speaking on his Martin Lewis Money Show on ITV, the financial journalist recommended viewers try to 'repay the right way' if they had multiple debts.
The 'snowball' method involves looking at which debts have the highest annual percentage rate (APR) rates attached, and tackling them first.
'Tackle the debt which is growing the fastest, first'
Next, he said people needed to concentrate on clearing that debt first, while making the minimum payment on all of the others, because that debt is 'growing quickest.'
He said: 'You take all the spare cash you possibly have and put it all on clearing the highest interest debt and ignore the others.
'You only pay the minimums on the others – not something I'd normally say but with multiple debts, I would. Then [the largest debt] goes because you've paid it off and then you work on clearing the next largest interest debt.
'Why? Because that's the one growing quickly and costing you the most.'
Once the largest debt is out of the way, Martin explained people could go on to start clearing their second one, and so on.
'Of course within all of this, try not to borrow anymore as that is going to make life more difficult,' he noted.
Martin explained people with debts did not need to clear their largest debt first and they did not have to pay all their debts equally.
'If you're struggling, I would be open about it'
Martin went on to say that many people were experiencing 'peer pressure' to spend during the cost of living crisis.
'If you're struggling, I would be open about it. Tell people you're in debt. Tell people you can't afford it and can't afford to go to dinner with you,' he advised.
'I can't afford to go to the pub and have a round I just need to stay in myself and everybody else. Let's accept that honestly, and not put pressure on people to spend when they don't have the cash.'
The financial journalist also urged viewers struggling to cope with debt to seek help throughout his programme.
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