Paying Off Debt

Introduction

Debt can creep up slowly and then suddenly feel impossible to manage. Credit cards, overdrafts, buy now pay later and personal loans can all add pressure to your monthly budget. The good news is that you do not need to be perfect with money to turn things around. You simply need a clear picture of what you owe, a plan for how you will tackle it, and consistent action over time.

This guide is designed for beginners who want straightforward, practical steps rather than complicated jargon. You will learn how to list and understand your debts, how minimum payments really work, and which repayment strategies can help you pay off what you owe faster. You will also see how to free up extra cash, protect yourself from future problems and know when to ask for help.

Nothing here is about shame or blame. Many people use credit to get through difficult periods or simply because they were never taught how interest and minimum payments work. The aim of this guide is to help you move from feeling stuck and stressed to feeling informed and in control.

Step 1: Get Clear on What You Owe

The first step in paying off debt is to stop guessing and start looking at the real numbers. It can feel uncomfortable at first, but having an honest view of your situation is often a huge relief. Once everything is written down, you can make a proper plan.

List Every Debt in One Place

Gather recent statements or log in to your online accounts for every type of borrowing you have. This might include credit cards, overdrafts, personal loans, car finance, buy now pay later, store cards or money owed to friends and family. Create a simple list that includes:

• The name of the lender or company
• The type of debt (credit card, loan, overdraft and so on)
• The current balance
• The interest rate (APR)
• The minimum payment required each month
• Any special terms, such as 0% promotional periods

Seeing the full picture can feel intense, but it also shows you exactly what you are dealing with. From here, every step you take will be based on facts, not fear.

Understand Interest Rates and Minimum Payments

The interest rate tells you how expensive that debt is over time. The higher the rate, the more it costs you to borrow. Minimum payments are the lowest amount you must pay each month to keep the account in good standing. On many credit cards, the minimum payment is set low, which keeps the monthly bill small but can keep you in debt for many years.

If you only ever make the minimum payment, most of your money can go towards interest instead of reducing the balance. This is why paying more than the minimum payment, when you can afford it, is one of the most powerful ways to speed up your journey out of debt.

Step 2: Build a Realistic Starter Budget

To pay off debt, you need spare money each month. A realistic budget shows you where your money is going now and how much you can redirect towards debt. The aim is not to create a perfect spreadsheet but to understand your income, essentials and non-essential spending.

Know Your Monthly Income and Essentials

Start by listing your total monthly income after tax. Then list your essential expenses. These are the outgoings you must cover to live and work safely, such as:

• Rent or mortgage payments
• Council tax and household bills (energy, water, internet)
• Food and basic household shopping
• Transport to work or study
• Insurance and essential subscriptions
• Minimum payments on all debts

Subtract your essentials from your income. The money left over is what you can split between extra debt repayments, savings and optional spending.

Spot Areas to Cut Back Gently

Next, look at non-essential spending. This might include eating out, takeaways, streaming services, shopping, subscriptions and impulse purchases. The goal is not to remove all enjoyment, but to find small savings you can redirect towards debt.

For example, cancelling one or two unused subscriptions, planning cheaper meals a few times a week or reducing impulse online orders could free up £20–£100 a month. When that extra money goes on top of minimum payments, your debt can reduce much faster.

Step 3: Choose a Debt Repayment Strategy

Once you know what you owe and how much you can put towards debt each month, it is time to decide how to use that money. Two of the most popular methods are the debt snowball and the debt avalanche. Both can work well. The best one for you is the one you are most likely to stick with.

The Debt Snowball Method

With the debt snowball, you focus on paying off the smallest balance first, while making the minimum payment on all other debts. When the smallest debt is cleared, you roll the money you were paying on it onto the next smallest, and so on.

This method creates quick wins, which can be very motivating. Watching entire debts disappear, even small ones, helps you feel progress and keeps you engaged with the plan.

The Debt Avalanche Method

With the debt avalanche, you focus on the debt with the highest interest rate first, while making the minimum payment on all others. When the most expensive debt is paid off, you move to the next highest rate, continuing until all debts are cleared.

This method usually saves more money in interest overall. It is mathematically efficient, but you may have to wait longer to clear your first debt compared with the snowball method.

A Hybrid Approach

Some people prefer a mix of both methods. For example, you might clear one or two small debts first to build momentum, then switch to targeting your highest interest debt. What matters most is that you choose a plan that feels achievable and motivates you to keep going.

Step 4: Make More Than the Minimum Payment

No matter which strategy you choose, the key to paying off debt faster is to pay more than the minimum payment whenever you can. Minimum payments are designed to keep costs low in the short term but can keep you in debt for years.

For example, if you have a credit card balance and only ever pay the minimum payment, the monthly amount may gradually fall, but so does the speed at which you reduce the balance. Even an extra £20–£50 per month on top of the minimum payment can dramatically shorten the time it takes to clear the debt.

Try to set a fixed amount for your target debt that is higher than the minimum payment. Treat this like a non-negotiable bill in your budget. When you get extra money, such as overtime pay, a small bonus or selling items you no longer need, consider putting a portion of it towards that debt as well.

Step 5: Free Up Extra Cash to Attack Debt

If your budget is tight, it can feel impossible to find spare money. However, small changes can still add up over time. The goal is not to cut everything, but to identify a few changes you are willing to make for a period while you focus on paying off debt.

Reduce Spending Where You Can

• Plan meals in advance and reduce takeaway orders.
• Review subscriptions and cancel those you rarely use.
• Set a weekly spending limit for non-essential shopping.
• Look for cheaper options on bills where possible, such as mobile or broadband.

Increase Income if Possible

• Ask about overtime or extra shifts if your job allows it.
• Sell unused items online or at local markets.
• Use skills you already have to do small freelance or side jobs.
• Review whether you are being paid fairly for your role and experience.

Even if you can only free up a small amount at first, directing it on top of your minimum payments keeps your plan moving forward.

Step 6: Protect Yourself While You Pay Off Debt

It is important to protect yourself against setbacks while you are focused on paying down what you owe. A sudden bill or emergency can easily push you back onto credit if you have no buffer.

Build a Small Safety Buffer

Consider building a small emergency fund, even while you are paying off debt. This might be £100–£500 set aside in a simple savings account. The amount does not need to be large at first, but having something to fall back on can stop you reaching straight for the credit card when unexpected costs appear.

Avoid Taking On New Debt

As far as possible, try not to add new borrowing while you are paying off existing debts. That might mean pausing use of certain credit cards, turning off saved card details in online accounts or removing buy now pay later options where they are too tempting.

Automate Where You Can

Setting up direct debits or standing orders for at least your minimum payments helps protect you from missed payments and late fees. Where possible, automate any extra payment you have chosen for your target debt as well. This reduces the chance of forgetting and keeps your plan on track.

When to Get Help With Debt

If your minimum payments are already unaffordable, if you are falling behind on bills or if you feel constantly stressed and unable to see a way forward, it may be time to seek help. Speaking to a free and independent debt advice service can give you tailored guidance for your situation.

They can help you review your budget, understand your options and, where appropriate, discuss formal solutions such as debt management plans or other arrangements. Reaching out for help is a sign of taking control, not failure. The earlier you get support, the more options you are likely to have.

Final Thoughts

Paying off debt is rarely instant, but it is absolutely possible with a clear plan and consistent action. By understanding what you owe, building a realistic budget, choosing a repayment strategy and paying more than the minimum payment where you can, you begin to move in the right direction.

Progress may feel slow at first, but every payment reduces the amount you owe and the interest you will pay in future. Celebrate the small wins, such as paying off a single debt or sticking to your plan for a few months. Over time, these small wins add up to real change and a more stable financial future.

You do not need to tackle everything perfectly. Start with one step from this guide today, however small, and build from there.