Martin Lewis has shared his simple 'snowball' trick that could help anyone who has an overdraft or is in debt. The MoneySavingExpert (MSE) founder said that it's an effective way to clear any outstanding debts.
Martin said those who owe money should focus on paying the debt with the highest annual percentage rate (APR) first as this is the debt that is growing the quickest, which in turn will be the most expensive. Once you have cleared this debt, then you can work on paying off the second one and so on.
Speaking on ITV's The Martin Lewis Money Show Live on Tuesday night, he said: "I want you to list all your debts in order of interest rates, highest first, which for many will be the overdraft.
READ MORE: Primark shoppers dumbfounded by change to every store as temperatures drop below zero
"Then you take all the spare cash you possibly have and you put it at clearing the highest interest rate debt. Only pay the minimum on the others. Not something I would normally say, but with multiple debts, I would.
"Then when this one goes because you've paid it off you then focus on clearing the next highest interest rate. Why? Because that's the one growing quickly and costing you the most. And once that goes you clear the next and the next and so on."
He added: "Of course within all of this, try not to borrow anymore as that is going to make life more difficult."
The Money Saving Expert noted that to be able to pay these debts, you will need to make yourself a budget and try to stick to it, as you will need to be able to cover the debt payments each month. Martin then explained how debts were not something you had in isolation, but something that you build up due to spending elsewhere and you should try and pay them off where you could, by using savings if need be, says the Mirror.
After this section of his show, the Money Saving Expert noted that during this cost of living crisis, there is a lot of "peer pressure" to spend. He said: "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.
"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."
Throughout the show, the Money Saving Expert reiterated that if you were struggling with debts, as several viewers wrote in to say they were, then you should reach out for help if you felt like you were not coping. Help can be found at charities such as StepChange Debt Charity, Citizen's Advice, and National Debtline.
READ NEXT:
Women say budget £7.99 mascara makes even the shortest lashes 'look like salon extensions'
Boots shoppers hail 'incredible' £38 beauty box with more than £170-worth of premium products inside
Aldi shoppers rush to buy 'magic' £2.99 cream that makes stretch marks VANISH
Matalan shoppers praise 'flattering' £7 dress that suits everyone and makes you look slimmer
Aldi shoppers say £40 hair Special Buy is 'MUCH better' than £190 GHDs
