How to get out of debt
make a list of all your debt
Getting into debt can happen to anyone.
What matters now is taking the first step toward improving your situation.
Start by writing down every debt you currently owe, including:
Personal loans
Credit cards and store cards
Overdrafts
Any other borrowing or finance agreements
Next, make a note of:
The balance owed
The interest rate (APR)
The minimum monthly payment
Once you’ve listed everything, add up the total amount owed. Seeing the full picture might feel uncomfortable, but it’s a crucial first step in taking control.
Remember: ignoring debt won’t make it disappear, but understanding it puts you back in charge.
Creating a budget is one of the most important steps toward becoming debt-free.
It helps you see where your money is going, make sure your bills are covered, and spot areas to cut back.
By keeping your spending in check and freeing up extra cash, you’ll have more to put toward your debts each month.
See our full guide on how to budget for practical steps and examples.
Becoming debt-free isn’t just about numbers. It’s also about how you think about money.
A positive money mindset helps you stay focused, make wiser spending choices, and stick to your plan.
This isn’t about cutting out all enjoyment; it’s about spending with purpose and building habits that support your goals.
Keep reminding yourself why you want to be debt-free. that motivation will help you stay on track.
See our full guide on how to change your money mindset for tips and ideas.
Starter Emergency Fund
Before focusing fully on paying off debt, it can help to build a small emergency fund.
This acts as a safety net if an unexpected expense comes up, like a car repair or household bill, so you don’t have to rely on more borrowing.
Many people aim to save around one month’s essential living costs as a starting goal.
You could build this fund by selling things you no longer use such as clothes, old phones, or jewellery or by cutting small, non-essential expenses.
Once your emergency fund is in place, you’ll have peace of mind and can focus your spare money on reducing debt.
Choose a Debt Repayment Method
Once you’ve listed all your debts, it helps to have a clear plan for how you’ll pay them off.
Two of the most common approaches are the Debt Avalanche and Debt Snowball methods.
The Debt Avalanche Method
This approach focuses on reducing interest costs first.
List your debts in order of highest to lowest interest rate.
Make the minimum payment on all debts each month.
Put any extra money toward the debt with the highest interest rate.
Once that debt is cleared, move the money you were paying on it to the next highest rate.
This method can save money in the long run and help you become debt-free faster, though it may take longer to see visible progress at first.
The Debt Snowball Method
This approach focuses on quick wins and motivation.
List your debts from smallest to largest balance.
Make the minimum payment on all debts.
Focus extra payments on the smallest debt first.
Once that’s paid off, move to the next smallest, and so on.
You’ll see results sooner, which can help you stay motivated even if you pay slightly more interest overall.
The Debt Avalanche vs Snowball
Avalanche Method
Saves more money on interest and can clear debt faster.
Snowball Method
Builds momentum with quick wins, helping you stay on track emotionally.
Both methods can work well. It’s about choosing the one that best fits your personality and motivation style.
write down your debt-free plan
A plan in your head is just a wish… but a plan written down is a promise.
Seeing your goals and your steps on paper gives you a sense of direction and control.
Like your debt list, it might feel daunting at first, but it’s your roadmap to freedom.
Your plan doesn’t need to be perfect or fixed; life changes, and so can your plan.
What matters is that you have something to follow.. a flexible guide to keep you moving forward.
track your progress
Celebrate every milestone along the way.
Keeping track of your journey helps you stay motivated and reminds you how far you’ve come.
You might mark off achievements such as:
Saving your first emergency fund
Paying off a credit card
Clearing a loan or overdraft
Each goal ticked off is one more step toward being debt-free and every win, no matter how small, deserves recognition.
What Else To Consider
Once you have a plan in place, there may be other ways to make your debt more manageable.
Here are a few options you could explore: but remember, these won’t be right for everyone, and it’s important to check all the details carefully before making any changes.
Check if You Can Reduce Interest Costs
If you’re paying high interest, it might be worth looking at whether a lower-rate loan or balance transfer could reduce what you pay overall.
Some people find that moving credit card balances to a 0% balance transfer card (often with a small fee) can help, if they qualify and can clear the balance before the offer ends.
Others may find that replacing several debts with one lower-interest loan helps simplify repayments, though it’s not suitable for everyone.
It’s always worth checking whether your overdraft is costing you more than other forms of borrowing too.
These options carry risks: if payments are missed or terms change, costs can rise. Always check eligibility, fees, and conditions before applying for any new credit.
Debt Consolidation
Some people combine multiple debts into one single payment. This can make budgeting simpler and may reduce monthly costs but it can also extend repayment time or increase the total amount repaid.
It’s important to think carefully before consolidating and ensure any new loan is genuinely more affordable.
Affordability Complaints
If a lender gave you credit that was unaffordable at the time meaning the repayments left you struggling with essential bills or borrowing again to keep up, you might have grounds for an affordability complaint.
You can contact the lender directly, explain your situation, and provide details about your income, expenses, and debts from that period.
They typically have up to eight weeks to respond.
If you’re unsure how to raise a complaint, free help is available from Citizens Advice or the Financial Ombudsman Service.
Should You Use Savings to Pay Off Debt?
This is a question many people ask, and there isn’t one right answer.
On one hand, savings provide peace of mind for unexpected costs. On the other, high-interest debt can cost more than you’ll ever earn from most savings accounts.
Here are a few things to think about:
Interest Rates
If your debts charge a much higher interest rate than your savings earn, paying some of that debt off could save you money over time.
Emergency Fund
It’s generally wise not to use all your savings to clear debt. Keeping at least £500–£1,000 aside as an emergency fund can stop you from needing to borrow again if something unexpected happens.
Peace of Mind vs. Progress
For some people, knowing they have savings helps them sleep better.
For others, watching their debt go down gives them more motivation.
There’s no one-size-fits-all answer, it’s about finding a balance that helps you feel both secure and in control.
make The sacrifices now for a better future
Becoming debt-free often means making some tough choices but every sacrifice you make now brings you one step closer to financial freedom.
Saying “No” (for now)
Turning down nights out, holidays, or takeaways can be difficult, but it isn’t about missing out, it’s about valuing your future freedom. True friends will understand, and these moments of saying “no” now will make the “yes” later feel even better.
Cutting Back on Small Pleasures
Little treats and impulse buys add up. You don’t have to give them up completely, just be more intentional. Choosing when to spend (and when not to) helps your debt-free progress move faster without feeling deprived.
Living Below Your Means
Repairing, reusing, and buying second-hand can help you stay within budget and build gratitude for what you already have. Over time, this mindset can stay with you well beyond your debt-free journey.
Remember
Debt is borrowing from your future self.
The goal isn’t to feel punished, it’s to create lasting freedom and control over your money.
Every small sacrifice today is an investment in a more secure tomorrow.
Getting out of debt is simple
but it’s not easy
Getting into debt is easy. Paying it off takes effort, patience, and persistence.
Life will throw challenges your way like unexpected bills, setbacks, or even moments of doubt, but don’t let them stop you.
Budgeting and money management are skills, and like any skill, they take practice. You won’t get it perfect from day one, and that’s okay.
Be open about your journey. Talking to trusted friends or family can help relieve stress and keep you accountable.
Most importantly, stay committed. Getting out of debt takes focus, determination, and the belief that you can change your financial future.
Your debt-free journey will take time!
Be patient, the results will come, and they’ll be worth every bit of effort.
Everyone’s journey is different. How fast you clear your debt depends on your income, your starting balance, and how much you can set aside each month.
It’s easy to compare yourself to others friends, colleagues, or people online who seem to progress faster. But remember: your journey is your own.
Focus on your plan, your pace, and the long-term freedom you’re working toward. Every small step counts, and consistency will get you there.
Being Debt Free
Just imagine being completely debt-free…
No more payments disappearing the moment you get paid. No more juggling bills or feeling like your money is already spoken for.
You’ll finally have the freedom to choose what to do with your income. To save, invest, or simply breathe a little easier.
The peace of mind that comes from having no consumer debt can truly change your life.
Keep picturing that freedom.. it’s what will keep you motivated when the journey feels tough.
Remember, becoming debt-free doesn’t mean the journey ends. It’s actually the beginning of a new chapter. One where your money starts working for you.
Next step
See our Building Wealth section for ideas on saving, investing, and creating long-term financial security.
Disclaimer
This page is for general information only. It isn’t financial advice. If you’re struggling with repayments or need help managing debt, consider speaking to a free, regulated service such as StepChange or Citizens Advice
