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Store credit cards are financial traps dressed up as discounts. Sign up today, save 15%, spend the next three years paying it off at 24% interest. And here you are.
First rule: you can’t fix debt without knowing the actual number. Feels obvious, but most people in debt avoid looking at the total like it’ll magically fix itself.
1. Add Up Everything You Owe
Pull every statement. Credit cards, car loans, student loans, that medical bill you’ve been ignoring. Add it all up. Write down the total somewhere you’ll see it.
This number will be depressing. That’s fine. You need to know what you’re dealing with so you can watch it shrink.
2. Kill the High-Interest Debt First
Pay minimums on everything, then throw every extra dollar at whatever has the highest interest rate. Credit cards usually top the list at 18-28%. Car loans and student loans typically sit lower.
Math’s simple: a £5,000 balance at 24% interest costs you £1,200 a year just to stand still. Kill that one first and suddenly you’ve got £100/month that was going to interest payments.
Ignore anyone who tells you to pay off the smallest balances first for "psychological wins." You’re not a child who needs a sticker chart. You’re someone with a maths problem, and the maths says tackle high interest first.
3. Switch to Cash for Everything Non-Essential
Cards make spending feel fake. Handing over actual cash makes it real again. You don’t need to cut up every card you own, but you do need to stop using them for groceries, coffee, nights out, all of it.
Keep one card for emergencies and online purchases. Everything else: cash. You’ll spend less without trying because parting with physical money hurts in a way swiping doesn’t.
4. Call Your Creditors and Negotiate
Most people assume the interest rate and fees are set in stone. They’re not. Call your credit card company, explain you’re struggling with the rate, ask if they can lower it. Plenty will, especially if you’ve been making payments.
Same with medical bills and collection agencies. They’d rather get 60% of what you owe than nothing. Offer a lump sum for less than the total. Worst case, they say no and you’re exactly where you started.
5. Cut Subscriptions You Don’t Actually Use
Cancel the gym membership you haven’t visited in four months. Downgrade your phone plan. Drop the streaming services you only use twice a month. Each one’s small but they add up fast.
Go through your bank statements for the last three months and highlight anything that auto-bills. If you wouldn’t sign up for it again today, cancel it.
6. Set a Realistic Budget (and Actually Follow It)
Once you’re out of debt, the last thing you want is to slide right back in. Track what you spend for a month, no judgment, just data. Then set limits for each category that match your income.
Check it every two weeks. If you’re blowing past your restaurant budget by the 10th, you know you need to cook more. Budgets only work if you look at them.