How to become debt free

The longer we take to pay off debt, the more it costs us.

So if there’s room in the budget, it’s a good idea to put more money towards debt repayments.

Juggling several debts? The quickest way to get out of debt fast is to pay off the debt with the highest interest rate first, such as credit cards or hire purchase. Use our budgeting tool to make a money plan.

Make a plan to get out of debt


Write it down

The first step is to check how much debt you have, and what sort it is. Make a list of all your debts. 


Order your loans from highest interest rate to lowest

Next, list the interest rate on each one. If you're not sure what the interest rate is, you can look it up in your loan agreements or credit card bill.

Identify which debt charges the highest interest. This will go to the top of your list. Tackling this first will save you the most in the long run. 


Send any additional payments to the first debt on your list

Focus on paying the minimum towards each loan, then send any additional payments you can to the debt with the highest interest. If you can, make bigger repayments to pay off this debt faster.

When it’s paid off, start paying more off the debt with the next highest interest rate.

We call this the 'avalanche' method.

Debt consolidation

Sometimes a bank or other lender can combine several different high-interest loans into one lower-interest loan. (A single payment can be a lot easier to manage than multiple ones, and you could save a lot of money by paying less interest.) This is called debt consolidation. You just need to be aware that repaying a new loan over a longer period could cost more in interest overall. The trick is to keep paying it down as fast as possible – and avoid racking up any new debts along the way. Take a look at our guide to consolidating debt.


Trouble repaying?

If it gets hard to keep up with debt, talk to the person or organisation that lent the money as soon as possible. They may be able to work out a new repayment plan.

For free help and support getting on top of your debt, talk to the team at MoneyTalks. You can reach them on 0800 345 123, or text 4029. You can even use this service anonymously.

Don’t know where to start?

Check out our 6 steps Get Sorted programme to get you on track.

Head to the 6 steps