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Would you like to tackle your debt? Whether it’s credit cards, loans, mortgages or finance agreements, everyone has their own debts, but it’s making sure you have them under control.

Getting on top your debt can be an uphill climb, but the summit is knowing that you have your finances under control and you have peace of mind for the future. It might seem impossible right now, but breaking it down into smaller, manageable steps can make the journey a lot easier.

We’ve put together a useful guide that includes different steps you can use to move towards your goal of reducing and even completely wiping your debt. Some may have already used some of these steps already and may be in the process of reducing, whilst others may be just getting started. Wherever you are in our list, we hope it will be useful for you in tackling your debt and improving your financial circumstances.

How do I reduce my debt?

Whatever your financial situation, we all know the main goal is to reduce your debt. This can be done through a variety of methods but it will take hard work in order to reach and hopefully surpass your goal.

It is also not easy and, in some cases, will take a long time. A lot will depend on your financial situation, your career path and making sure you can put time aside to concentrate on it along with other pressures.

The hardest part is getting started. After that, like many other things, if you can turn it into a habit, you will find you can reduce your debt in the background until you don’t even think about it.

Tackle your debt in 10 steps

The main reason for tackling your debt is to ensure that the situation doesn’t get any worse and you can comfortably reduce what you owe within a realistic time frame. These steps are designed to ensure you’re making positive steps towards improving your finances and becoming more proactive when managing your debts.

1. Decide you want to reduce your debt

The first step is actually wanting to reduce your debt. It might sound ridiculous, but you have to really want to get started and that means putting time aside to actually doing it. Whether it’s writing all your outgoings on a piece of paper or creating a spreadsheet so you can view your monthly expenses on a computer, you will have to make time for it.

Money management might not be your strong suit, but that doesn’t mean you can’t learn better habits and start reducing your debt from today. Making this first decision will make the remaining 9 steps (and beyond) that little bit easier.

2. Make a budget

If you’ve never made a budget before, the time to start is now. Making a budget will allow you to see everything you are spending during the month compared with how much money you have coming in.

This is incredibly useful in working out how much you can afford to put towards reducing your debts and also giving yourself an overview of what your finances look like. It might not be a pretty picture at first, but you can make a change and watch it get better as the months go by.

Start out by accessing your online banking or print out a bank statement for your personal account. Write down all of your outgoings in a list. They might include household bills, subscriptions and travel. Then, write how much money comes into your account every month, in the form of wages, benefits and any other income you may have.

Total up both of these columns and compare them. If your outgoings are higher than your income, you might want to start reducing how much you’re spending every month. The goal is to get your income higher than your outgoings. Once you’ve done that, you can start putting more towards your debts and clear them faster.

3. Reduce your overall outgoings

As mentioned, reducing your outgoings is crucial. Once you’ve done that, you can begin to reduce your debt more effectively. You can do this in several ways, including:

  • Cancelling unused subscriptions (streaming, memberships etc.)
  • Reducing how much you spend on food
  • Eating in cafés and restaurants less
  • Switch energy suppliers
  • Switch broadband provider

For more ways to save money, check out our useful article on 21 ways to save money here.

4. Boost your income

There are ways to also boost your income, meaning you can finish the month with more coming in than you have going out. Many of these are short-term boosts, but they can make a difference if done regularly. They include:

  • Selling unused items online (eBay, Amazon, Facebook marketplace)
  • Selling unused items at a car boot sale
  • Use a pawn shop or equivalent to sell higher value items such as electronics and jewellery

You can also make long-term boosts, but these are more to do with how you work and very much depend on your career path and the industry you work in:

  • Find a new job in a different industry
  • Switch to another job doing the same thing, but for better pay
  • Start improving your CV by participating in online training or evening classes
  • Take on additional freelance work, as long as you are OK to do so
  • Take on an additional job, as long as this doesn’t impact your lifestyle too much

5. Work out your combined monthly debt

Now that you have a budget to look over, take a look at your debts. These can be from credit cards, loans, mortgage payments and any other financial agreements you may have to pay off high-value items. It can even include fees and charges from your bank account such as overdraft fees.

Calculate the combined monthly amount you currently have to put towards these debts and write it down. Once you have a total (try to look at the last 12 months to get an accurate figure), you can calculate how much you need every month to keep paying off these debts. The idea is to pay more than this total in order to reduce your debts.

6. Reduce the amount you pay towards debt every month

The cost that usually makes it more difficult to pay off debts is the interest and any additional charges that make it more expensive. Sometimes these additional charges can be as much as the debt payments themselves, making it much more difficult to reduce and ultimately, free yourself from debt.

There are several things you can do to either reduce the interest or consolidate current debt that you have:

  • Switch to a 0% balance transfer credit card – this is a credit card that means you won’t have to pay any additional interest. You can often consolidate multiple credit cards and even arrange a money transfer to pay off old loans, depending on your provider. This might even extend the amount of time it will take to pay off the combined debt, but will give you the flexibility to pay it off at a more realistic rate
  • Look for remortgage deals – you can also take out a remortgage deal. This will let you alter the terms of your existing mortgage by increasing the term, or reducing the amount you pay per month. This could free up money to go towards other debts you may have

7. Prioritise your debts

You can also prioritise your debts in order to pay them off one by one. To start off, write down each debt in a list and how much you are currently paying every month. Also make a note of interest rates or additional fees attached to each debt. The higher the interest rate or the amount you pay in fees, the more you should prioritise that debt to get it paid off first.

For example, if you have a personal loan and a credit card, you could reduce the amount you’re repaying on the card to the minimum monthly amount, so you can overpay on your loan. This will make sure you can wipe off this debt first, then have more to put towards your remaining debts, but always check your lender or provider that overpayments are an option, otherwise you could be paying more fees!

8. Calculate how much more you can put aside per month

You will already have your total figure for how much you need to put towards your debts every month. For some debts such as credit cards or loans that allow overpayments, you should be able to put a larger amount towards them to get them paid off quicker.

Once you are in a stable position where your income is higher than your outgoings, you should then have an amount that you can put towards higher debt repayments. You might even be able to reduce your outgoings and have additional funds you can use instead.

If you have prioritised your debts, ensure you can put additional funds into this one debt, before moving onto others. If not, you can spread your additional funds across your debts instead.

9. Improve your credit score

Your credit score is important for any future borrowing you plan on doing, and can give you a better chance of being accepted if it is higher. If you have had issues in the past with repaying debt, the likelihood is your credit score will be poor at this moment in time.

Start off by looking at your credit report. You can get this for free from many companies but some will sometimes have a monthly fee. Have a look at the reports available and see which one is best for you.

Your credit report will often point you in the right direction when it comes to making improvements to your score. Find out more about improving your credit score with our useful article here.

Making repayments on your debts every month will already have a positive impact on your credit score, but there are more things you can do. They include:

  • Getting a credit builder credit card – make small payments on the card every month and return the balance to zero. This will make gradual improvements to your score
  • Using a credit builder service – these are often provided by banks or current account providers, but will allow you to subscribe to the service to make gradual improvements to your score too

10. Make realistic goals

Last but not least, once you have made all the necessary calculations, you might also want to set goals for yourself to pay off certain debts. This might be working out how many payments you need to make until your credit card is back to zero, for example.

More than anything, make your goals realistic. It’s no good overpaying every month when you might not be able to afford it. Instead, keep your repayments flexible and make sure you aren’t jeopardising your own financial stability by paying too much. Reducing your debts can be a slow process, but it will be worth it in the long term.


For more help and advice, head over to StepChange or the Money Advice Service to find how you can start tackling your debt today. Good luck!