Getting out of debt starts with one clear first step: understanding exactly what you owe. Many people in debt avoid looking at the full picture because it feels overwhelming. But you cannot make a plan without knowing the numbers — and the plan is what makes the situation manageable.
Step 1: List every debt
Write down every debt you have: the lender, the balance, the interest rate (APR), and the minimum monthly payment. Include credit cards, personal loans, car finance, overdrafts and any buy-now-pay-later balances. Total them up. This number may feel large, but seeing it clearly is the first step to reducing it.
Step 2: Prioritise by type
Not all debts are equal. Priority debts — rent, mortgage, council tax, utility bills, court fines — must be paid first because the consequences of non-payment are most severe (eviction, repossession, enforcement action). Non-priority debts — credit cards, personal loans, overdrafts — are serious but the immediate consequences of non-payment are less extreme. Always address priority debts first.
Step 3: Stop adding to the debt
Before focusing on repaying debt, make sure you are not continuing to borrow. Check whether your budget has a monthly surplus — if it does not, there is no money available to repay debt above the minimums. Addressing the budget first (reducing costs or increasing income) creates the surplus that makes debt repayment possible.
Step 4: Choose a repayment strategy
Two main approaches exist for non-priority unsecured debt. The debt avalanche — paying the highest interest rate debt first — is mathematically optimal and saves the most money. The debt snowball — paying the smallest balance first — provides psychological wins that keep many people motivated. Both work: the right choice depends on what you know about your own motivation.
Step 5: Direct every available pound to one target
Meet the minimum payment on every debt. Then direct all additional available money to your chosen target debt. When that debt is cleared, roll its payment to the next target. This compounding of freed-up payments — sometimes called the debt rollover method — is the most powerful mechanical aspect of any debt repayment plan.
General guidance only — not regulated financial advice.