In which order do I become debt-free?

Frequently asked questions

Avalanche or snowball – which is better?

Mathematically the avalanche: anyone who always puts the extra money on the debt with the highest interest pays the least interest and finishes earliest. In practice the snowball often wins: anyone who pays off the smallest debt first has one creditor fewer after a few months – and therefore keeps going. The calculator shows how big the difference is with your figures. If it is small, take the snowball.

Which debts belong in the plan?

All with a fixed instalment: instalment loans, overdraft (with the amount you want to reduce it by each month), credit card limits, instalment purchases, debt collection claims with an instalment agreement. Rent, electricity and running contracts do not belong in it – those are fixed costs already deducted from the budget.

What if the budget does not cover the minimum instalments?

Then no plan in the world is the solution, but a conversation: with the creditors about lower instalments (instalment plan calculator) and with free, state-recognised debt counselling. It can bundle instalments, negotiate settlements and – if necessary – accompany you into consumer insolvency. The calculator tells you honestly when you are at that point.

Should I consolidate instead?

If a new loan pays off all expensive debts at a clearly lower rate and the instalment fits the budget: yes – the consolidation calculator works it out. The precondition is a bank that grants the loan; with negative entries that is hard. Then the plan with existing means is the realistic route.

How do I stick to the plan?

All instalments on one day right after your salary, by standing order. The extra money automatically too. A buffer of one monthly instalment in the account. Celebrate every creditor paid off – and put their instalment straight onto the next debt instead of spending it in everyday life. That is exactly the snowball effect.