Getting out of debt: get organised and use the Snowball System

Welcome back to our Debt Stories series.  This week we have Warren Shute talking about getting out of debt.  Warren was named the UK’s Financial Planner of the Year 2017 by the CISI. His first book The Money Plan became a bestseller on Amazon one day after its release, and he shares his thoughts, systems and experience on how to achieve financial freedom on his website,

Warren has his own debt repayment strategy and methodology which varies quite drastically to mine. I took my head out of the sand and uncovered £16k of debt in April 2018. my main steps were to pay off the high interest cards first (not the smallest balance) and build up an emergency fund of at least £3k (the amount needed to give me mental stability) at the same time as repayment of debt. Here is Warrens philosophy using the snowball method. I totally recognise the effect of the dopamine and the impact it can have when making a purchase and also when achieving by repayment of debt.

Over to Warren

I’ve been studying and fascinated by psychology for almost as long as I’ve been a financial planner, I think the two go hand in hand in so many different ways – and that’s especially true when it comes to paying off debt. When you’re in debt it can feel like there’s nowhere to turn and no way out.

That’s why I have a process that differs from most others when it comes to debt repayment, because it focuses on keeping you engaged in the process and feeling good as it progresses. I call it the Snowball System because you just keep building more and more momentum, and I’ve used it with many, many people over the 20-plus years I’ve worked in financial planning. It puts you back in control.

Before explaining it, we need to go back to basics in order to get you out of debt and into the black.

Getting out of debt: get organised and use the Snowball System

Setting yourself up for success

Don’t be fooled by debt: making a plan is just as important for someone who’s £40,000 in the red as it is for someone starting a business. If you don’t know where you’re going, you won’t get there. You wouldn’t start driving without a destination in mind; money is exactly the same.

If you don’t have any rules or boundaries about money, it will do what it wants. If you don’t do things like setting a weekly allowance and sticking to it, you are going to take longer to come out of debt than you could.

Money is very powerful because it’s emotional, so paying down your debt is all about changing your mindset and saying OK, I’ve not had any criteria in the past but that doesn’t mean I can’t start now. It’s about what you decide you’re going to do. If someone else has paid off their debt, then why can’t you?

If you do what you’ve always done, you’ll get what you’ve always got. You have to make decisions from a different place.

Getting organised

Our habits make us and our habits break us, and to change yours you need to take responsibility. My book The Money Plan outlines five steps to achieving financial freedom, and step 2 is about getting financially organised – knowing what comes in, what goes out, what you owe and what you own.

You can download a debt organiser spreadsheet for free in the resources section of my website, which shows you how to put all your debts, income and expenditure in a clear format. Doing this may produce numbers that surprise you, or simply confirm what you already knew subconsciously knew but didn’t want to see on paper. Be brave, it’s an important place to start.

Whats coming in has to be more than whats going out

Once you’ve done this, you must find a way to make sure that what’s coming in is more than what’s going out, that there’s a surplus at the end of the month. You need that surplus to be at least 12.5% of your income. Why 12.5%? That’s one hour of an eight-hour working day – the first hour of every day goes to paying yourself.

If your surplus isn’t 12.5%, you have two choices: reduce your expenditure or increase your income. 

For the first, you’ll have to make sacrifices. I work with people who say they can’t cut anything out of their budget, but then we go through their expenses and they’ve just got a new iPhone contract for £50 a month and they’ve got Sky TV costing them £60 per month. Go through all your expenditures and ask yourself three things: 

  1. Do I need this?
  2. Do I want this?
  3. Can I get the same experience cheaper elsewhere?

Switch and Save

You can also use sites like uSwitch to make sure your utilities spend is at a minimum, and make sure any insurances are at the lowest possible rate using a comparison site such a Topcashback compare

Everything’s relative: find things you can cut back on and reduce your dependency – spending gives you a dopamine boost, gives you satisfaction, but you can get that boost from other things, like being in control and re-shaping your future.

The second option can be achieved through the use of payment clubs like Top Cashback or Quidco, which can give you rewards on your normal shopping habits; voucher sites like can help too. You might also take a part-time job.

However you do it, you really need to make sure that you have 12.5% of your gross income going to you to help you pay off your debt. 

Assets and Liabilities

Next, look at your assets and liabilities. I personally think you should have at least a minimum of £1,000 in reserve for emergencies, but other than that, any other money you have elsewhere, you’re better off using it to pay down your debt with current interest rates being so low, don’t leave it in an account.

You can also look at things like reducing the rates of interest that you’re paying, like an interest-free credit card balance transfer or lower rates of loans. There are lots of comparison sites out there. On the free organiser spreadsheet there are links to different providers to see if you can save interest elsewhere.

I’m not a huge fan of consolidating all your debt into one, if you’re organised there are no disadvantages to keeping a number of loans or cards, all you’re trying to do is keep the payments down as low as possible. 

The Snowball System

Once you’ve written down exactly what’s going on, organise your debts on your spreadsheet in order of balance from smallest to largest. Ignore the interest rates, just order them by balance from low to high.

Now it’s time for the Snowball System. Here’s how it works: you pay the minimum payment on each card or loan you have, and then pay your extra 12.5% mentioned above, all your surplus, towards the smallest balance. All your focus and attention should be on paying that smallest balance off.

Why? To get a quick win, a dopamine boost. When you get that smallest balance paid off, you’ll start feeling good about the process and feel like you’re making tangible progress.

Once your smallest balance is gone, congratulate yourself – you’ve achieved something great. Then switch your focus to your new smallest balance: carry on paying the minimum off your other debts, and pay all your surplus onto that one.

Repeat this over time and you’ll get rid of your debts one by one, each time feeling that little bit freer. Momentum is huge in our decision-making, and the Snowball System continuously builds it.

From here, keep your spreadsheet up to date, review it once a month when you get paid, and keep things organised. Cut up any credit cards – I call them debt cards – for another dopamine boost and to show you’re in control, not them.

I respect that debt repayment is easier said than done and it’s an emotional journey, not a logical one, so connect with through my website and I’ll walk that journey with you. This is about long-term planning, not a quick win, and I’m here to help.

Thank you to Warren for this very useful and insightful post with a method that works.


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Lynn Beattie

Aka Mrs MummyPenny

Personal Finance Expert

I write about personal finance made simple, lifestyle choices that will save you time and money, as well as products and services that offer great value.

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