Getting out of debt

At my worst, I owed money in four different places. I didn’t even know the total. Finding out was scary. It was also the first step out.

Step 1: Face the numbers

Write down every debt: who you owe, how much, the interest rate (APR), and the minimum payment. Add up the total. It might feel bad, but you can’t make a plan for a number you won’t look at.

Step 2: Stop it growing

• Stop adding new debt to the cards and loans you’re paying off.
• Build a small starter emergency fund (Level 3), so the next surprise doesn’t go on a card.
• Pay every minimum, every month, to avoid fees and damage to your credit.

Step 3: Pick a method

Pay the minimum on everything, then put every extra bit of money towards one debt at a time. When it’s gone, roll that payment onto the next one. There are two ways to choose the order:

The avalanche: pay off the debt with the highest interest rate first. This saves you the most money.

The snowball: pay off the smallest balance first. You clear debts faster at the start, and those quick wins keep you motivated.

The avalanche is cheaper. The snowball can be easier to stick to. The best method is the one you’ll actually keep doing.

I went snowball. Clearing that first small store card in six weeks made me believe I could do the rest. Then I switched to avalanche for the big ones.

Step 4: Make it cheaper

• Ask your lenders for a lower interest rate or a payment plan, especially if you’re struggling. Many will work with you if you talk to them early.
• Consider a cheaper way to borrow, like a lower-interest loan to replace expensive debts, but only if you stop using the old cards.
• Put windfalls towards it: bonuses, gifts and extra side-hustle income.

Watch out

Be very careful of anyone who promises to make your debt disappear for a fee, or tells you to stop paying your lenders. Use free, trusted help instead.