I'm currently in a credit card debt and tried to work on the snowball effect method, but it still did not work. What should I do? - Seedly
 

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Credit Card

Asked by Anonymous

Asked on 11 Sep 2018

I'm currently in a credit card debt and tried to work on the snowball effect method, but it still did not work. What should I do?

Debt

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Kok Koon
Kok Koon
Level 5. Genius
Updated on 07 Jun 2019

I don't know how much you owe but I got $11k student debt when I graduated.

The upside was that the economy so bad in 2008 that all banks were requested by the Government to suspended interest charge on study loans:

What I do to clear my debts:

1. Work like there's no day no night.

Hustles, side jobs. Eat dabaos.

After 9-5 work go do part-time jobs.

Weekend go helpout at events.

When you work no day no night, where got time to spend right?

2. Live like a pauper.

Bring mother go holiday take budget $300 flight to China but take 13 hrs and 2 connecting flights. Poor mom.

And I cleared the Debt in 13 months.

3. Question yourself

Sorry ah, poster. If it's consumer debt, please go and work.

Don't let the Baby Boomers and Gen Xers be right that you are a strawberry. You got the debt, you suck it up and work your a** off.

You need a mirror. Don't waste time asking for magic pills in Seedly.

The people here put face put profile and you hide behind anomity to ask questions.

If the credit card debt came from medical bills you have my sympathy, otherwise, just work it off.

A bit harsh ah. But you asked what you need to do. Do it.

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Kok Koon
Kok Koon

on 12 Sep 2018

Agree with you, Wen Fong. Which is why we learn together as a community. :D It'll be to his/her credit to take the advice and act on it. If not, it'll just be mere words. Sometimes we do anonymous posters a favour when call a spade, a spade. I made several silly mistakes myself which I wish someone would wake me up. I'm doing what I wish someone did for me when I made those mistakes. Am glad you guys are moderating the tone like a hawk. Seedly is modelling the spirit of community very well in this personal finance space!
Leong Wen Fong
Leong Wen Fong

on 12 Sep 2018

Glad to have you on the team! Amazed at your willingness to share your experiences, even with a photo!!
Soh Sing Heng
Soh Sing Heng, Financial Blogger at SG Young Investment
Level 4. Prodigy
Answered on 11 Sep 2018

You can try the following steps:

  • Contact your creditors immediately and request to work out a repayment plan that can help reduce your payments to manageable levels
  • Pay off high interest rate debts first
  • Transfer debts with high interest rates to cheaper alternatives
  • Reduce credit card expenses and cash advances

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Singchang Toh
Singchang Toh
Level 2. Rookie
Answered on 12 Sep 2018

Helped a friend work through her debt by taking up another loan with a lower int% (~3%), and clearing off all the ~25% CC debt.

Still needs discipline to pay off the new loan, but you save quite a bit.

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William Seah
William Seah
Level 3. Wonderkid
Answered on 12 Sep 2018

What do you mean, still did not work? What happened that led you to fail? Was it a terminal failure or a temporary lapse? what constitutes "not working"?

If we don't know why we fail, trying new methods or repeating old methods wouldn't work. We need to learn our pitfalls and work out a strategy with it.

Contact someone who can journey with you to evaluate your past experiences, develop a plan for your future strategies and walk with you on debt repayment. Reach out to someone here, myself or others in the group, who can help.

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Kenneth Lou
Kenneth Lou, Co-founder at Seedly
Level 8. Wizard
Updated on 07 Jun 2019

I'm gonna share the two methods of clearing debts so the audience and readers here may get better context!

  • Snowball method (reordering your debt by amount owed and clear the smallest first)
  • Avalanche method (reordering your debt by interest % and clear the one with the highest interest first)

In summary, I think in your situation it could be a discipline issue in clearing down your debts while not accumulating more. Because for the snowball method, the goal is to quickly work off you smaller debts before moving on to bigger ones. And for you, would highly recommend cancelling your card immediately or locking it up, to focus on using a debit card to spend (if needed instead). When you get your paycheck, you should allocate almost 80% to clearing your debt and withdrawing th 20% in cash, so you only spend what you can afford!

You can read more about these concepts here! https://blog.seedly.sg/hacks-to-clear-your-debts-fast-and-effectively/

Snowball Method:

Imagine a tiny snowball rolling down a hill. It starts small, but as it rolls down the hill, it adds another layer of snow, growing larger and larger and gaining momentum.

Pros:

This method rides on the psychological aspect of human minds. It is satisfying crossing a debt off your list and you get a boost from which.

Snowballing also makes life more convenient. With every debt paid off, one will now have one less payment to remember to make, one less electronic payment to schedule.

Cons:

Interest is powerful, and it may work against you. This method requires a high level of discipline too. Given that you free up money quickly, the fate of extra cash lies in your discipline. Will you use it to clear that next bulk of debt or on that shirt you have been eyeing for the longest time?

Avalanche Method:

  1. Also known at the stacking method, list all your debts in order of interest rate, from highest to lowest. This time ignoring the amount of the debt too.
  2. Regardless of the amount of debt for each, one will repay as much money as he can for the debt with the highest interest rate. Once each debt is paid, one will move on to the next highest interest rate debt. One will continue doing this until all his debts are cleared.

Pros:

This method makes the most financial sense. One will be able to reduce the amount he pays due to interest rate when using this method. Minimising such payment as much as possible is the cornerstone of being financially healthy.

Cons:

By using this method, it can be rather discouraging since it will take a while to pay off debts. One will not be able to obtain the quick satisfaction of paying something off fast. This method requires an even higher amount of discipline than the previous method.

All the best in clearing your debt!

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Kenneth Lou
Kenneth Lou

on 13 Sep 2018

Yeah haha, kinda visual way to describe this!
Eric Chia
Eric Chia

on 13 Sep 2018

I'd always recommend the avalanche method! Nice terms to coin for the methods!
Colin Lim
Colin Lim
Level 3. Wonderkid
Answered on 12 Sep 2018

this scenerio, i have help a few people.. 1)check out the highest interest charged from various credit card debts. clear the highest interest debt first. example: amount: 4000 4000 4000 4000 interest: 5% 6% 7% 4% clear off 7% first..

2) check out your overall cashflow see which area to cut down anyway to liquidate for cash to clear debt

ultimately i help extreme cases where by the amount is 30-50k, the interest is almost equivalent to their income. last resort: what i learn is declare bankrupty but there is another way not to be declare bankrupty. hope this help

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