Clearing debt is essential. By doing so, you allow yourself to become financially well. If your budget is restricted by debt payments, you are missing out on putting that money towards your goals! Don’t panic - we’re here to help. If you are struggling with debt, but don’t know what to do about it, keep reading.

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Did you know that, according to the House of Commons Library, 48% of UK adults held some form of credit or loan in May 2024? That is almost half of the population that were in debt, with 35-44 year olds having the highest rate at 60% of them holding consumer credit.

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So, what can you do about it?

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You may be stuck in a cycle, paying the minimum payments on your debts every month, wishing you could put that money towards a new home or a well-needed holiday. There are two main methods that can help you pay off debt quicker, but which one you choose depends on what you need financially, your level of motivation and what you need to stay on track.

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The Avalanche Method

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As the name suggests, this method starts off with a bang - with the idea being to work from largest to smallest in regards to interest rates.

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How?

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List out all your debts and order them from the one with the highest interest rate, to the lowest. Don’t worry about the actual debt amounts.

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Make the minimum payments on each debt, except for the one with the highest interest rate - that’s the one you’re going to throw everything at. Once that one is clear, you move onto the next until they are all cleared.

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Why?

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This method makes the most sense financially as you will pay less in interest over time. It is a clear, easy method to follow and can be great for high interest debt, like credit cards. If you are more disciplined and are happy to wait longer for gratification, this method could be for you.

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The Snowball Method

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Forget everything about the Avalanche Method because this time we’re going from smallest to largest based on the amount of each debt.  

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How?

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List out all your debts and order them from the smallest value to the largest. Again, make the minimum payments on each debt, except for the smallest one - that’s the one you’re going to focus on this time. Once that one is clear, you move onto the next biggest one and so on.

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Why?

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The Snowball Method is great for motivation - you are clearing debts faster and the addiction of paying one off completely helps drive you to pay off the next. If you need help staying on track, this method could be for you.

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Tips to clear debt quicker:

• Try switching your bank account to get bonus cash
• Sell sell sell! Vinted, Facebook Marketplace - time for a clear out
• Meal prep - soups, pies, slow cooked meals are a staple for the winter and keep you from eating out or ordering in

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