Clearing Debts: How The Stacking And Snowball Methods Help

Licensed Moneylender In Geylang, Geylang Money Lender

For most people, debts may be a normal occurrence to make progress in life. From opening a new credit card account to applying for a house loan with a licensed moneylender, there are many ways in which debt manifests and are common in our modern lives.

Be that as it may, taking on too much debt than one can handle, whether from banks or reliable moneylenders in Singapore, is certain to lead to undesirable consequences. Therefore, it’s crucial to be financially responsible and diligent when it comes to repaying one’s obligations.

In this article, we go over two of the most effective ways to pay off all of your current outstanding debts.

The snowball method

The snowball method is a debt repayment process that focuses on removing as many debts as possible from your list of outstanding debts. The first step in this method requires you to take stock of all your present debts and list them down along with their details, such as their principal amount and interest rate.

Additionally, do also include the minimum monthly payment for each loan on the list and calculate their total. This total serves as a static expenditure that you’ll need to subtract from your income, the remainder of which shall be necessary to the snowball method.

Once complete, the next step is to sort your loans based on their principal amount from highest to lowest. To achieve this method’s primary goal, use the remaining sum mentioned previously to make an additional payment on the debt found at the bottom of the list (i.e. the loan with the lowest principal amount)

Paying off your debts in this manner enables you to quickly cross out the items on your list, thus preventing them from spiralling beyond control. Also, the swift progress you’ll make will be quite noticeable, providing you with a psychological boost to keep going until all of your debts eventually get paid off.

The stacking method

The stacking method works similarly to the snowball method, but with some slight differences. First and foremost is its goal: to reduce the amount you pay in interest as much as possible.

Second is in the sorting method, which will now require you to list your loans starting from the one with the highest interest rate.

Similar to the snowball method, you’ll also need to calculate the total of your minimum monthly dues for all loans on the list. Once you’ve determined which loan has the highest interest rate, you can then use whatever leftover cash you can spare to hasten its repayment.

The result of this method is that you’ll be incurring a significantly lower interest debt from your outstanding loans.


To show how the two methods work, here’s a simplified example. Below is a hypothetical list of debts with mock variables that we can use to demonstrate the process.

1. HDB loan - $6,000 principal with 7% interest

2. Credit card - $3,000 principal with 12% interest

3. Car loan - $4,500 principal with 8% interest

4. Student loans - $2,000 principal with 5% interest

5. Personal loan - $ 2,500 with 4% interest

If we were to sort them according to the stacking method, the credit card loan would be at the top, and it would be the first loan to pay off quickly to decrease your interest debt. On the other hand, the student loan would place first in the snowball method, followed by personal loans, and so on and so forth.


Being punctual in paying off one’s debt is, in most cases, the only requirement to retain a good standing in your credit report. However, by being methodical in your payments, not only can you save on cash in the long run, you’re also preventing them from turning into a burden that becomes too much to handle.