Step 1: List every debt
Record the lender, balance, interest rate, minimum payment and due date for each account. Include informal loans. The total is often less frightening than the uncertainty was.
Step 2: Stop the growth
Pause new credit use. A plan that adds debt while repaying it cannot succeed, no matter how large the payments are.
Step 3: Build a small buffer first
Set aside a modest emergency amount before attacking balances. Without it, the first unexpected cost goes back onto credit and undoes months of work.
Step 4: Choose a payoff order
- Avalanche: highest interest rate first. Mathematically cheapest.
- Snowball: smallest balance first. Slightly more expensive, but the early wins keep many people going.
Step 5: Free up cash to attack with
Cancel unused subscriptions, renegotiate one large fixed cost, and direct any windfall or raise straight at the target debt. Every extra amount is applied to the principal.
Step 6: Maintain momentum
When one debt clears, roll its entire payment onto the next. Keeping the total debt payment constant is what makes the final debts fall quickly.
If the numbers do not work
If minimum payments already exceed what you can pay, speak to a registered debt counsellor. Formal arrangements exist precisely for this situation and are better used early.