Debt in itself is not bad – a mortgage or a sensibly spread purchase can make life easier. The problem starts when you have several obligations, each with a different repayment, due date and interest rate, and you lose track of how much you owe in total. That is when debt stops being a tool and starts running your budget.

The good news: getting out of debt is not magic, it is a plan. Below is one in five steps.

Step 1: Write everything down in one place

Before you change anything, you need to see the whole picture. Take a sheet of paper, a spreadsheet or an app and for each debt note:

• its name (e.g. credit card, personal loan, phone instalments),
• how much is left to repay,
• the interest rate (ideally the APR, which also includes fees and commissions),
• the minimum monthly payment,
• the due date.

Many people discover at this step that their total debt is higher than they thought – or that one small loan costs more than a large one. It is unpleasant, but you cannot make a plan without it.

A useful fact for readers in Poland: contractual interest there cannot exceed twice the sum of the NBP reference rate and 3.5 percentage points. At the current rate of 3.75%, that is 14.5% a year. Many credit cards and overdrafts charge exactly that maximum. In other countries card rates are often much higher – which makes the steps below even more important.

Step 2: See what paying only the minimum costs

Lenders like to offer a low minimum payment. It looks convenient but is very expensive. Example: a 5,000 credit card balance at 14.5% a year.

• Paying 100 a month, you will be repaying for about 6.5 years and pay back about 7,716 in total – more than 2,700 in interest alone.
• Paying 150 a month, you will finish in about 3.5 years, paying back about 6,438.
• Paying 250 a month, you will finish in 2 years, paying back about 5,758.

The difference between 100 and 250 a month is almost 2,000 saved and four and a half years less in debt. Every extra 50 matters.

Step 3: Find a "surplus" in your budget

To repay faster than the minimum, you need an extra amount every month. It does not have to be large – 100–200 makes a huge difference.

Where to look:

• Subscriptions. Go through your statements for the last three months. Streaming, apps, memberships – there is usually something you do not use.
• Eating out and delivery. This is often the category where we spend the most "without noticing".
• Fixed bills. Phone, internet, insurance – one call to your provider or a comparison of offers can save a few dozen a month.
• Selling things you do not use. A one-off cash injection can close your smallest debt straight away.

Important: do not stop saving completely. Even while repaying debt, keep a small reserve – at least 1,000–2,000 – for emergencies. Without it, the first broken washing machine ends in another loan.

Step 4: Choose a method – snowball or avalanche

Both methods start the same way: you pay the minimum on all debts and direct the whole surplus to one chosen debt. Once it is paid off, you add its payment to the next one – and so on until the end. They differ only in the order.

The snowball method

You first pay off the smallest debt, regardless of the interest rate. You see results quickly: one debt disappears within a few months, then another. That is motivating and helps you keep going.

The avalanche method

You first pay off the debt with the highest interest rate. Mathematically it is the cheapest route – you pay the least interest. The first "win" may come later, though.

An example with numbers

You have three debts: a credit card (6,000 at 14.5%, minimum payment 180), a personal loan (9,000 at 11%, payment 300) and a 0% instalment purchase (1,200, payment 100). Each month you can add 200 on top of the minimums.

• Minimum payments only: you will be debt-free after about 33 months, paying about 2,900 in interest.
• Snowball (+200): the 0% instalments are gone after just 4 months, everything after 24 months, interest about 2,030.
• Avalanche (+200): everything after 24 months, interest about 1,960.

The conclusion? What matters most is that you add a surplus at all – that saves almost 900 and nine months. The difference between the methods themselves is small here (about 70). Choose the one you will stick with: if you need quick wins – snowball; if numbers motivate you – avalanche.

Step 5: Stick to the plan and do not take on new debt

• Automate your payments – standing orders on payday, so you do not have to remember.
• Track progress once a month. Write down how much is left on each debt. Watching the numbers shrink is the best motivation.
• Put the credit card away if it tempts you. You do not have to close it straight away, but do not carry it in your wallet.
• Be careful with "consolidation". Combining several debts into one loan only makes sense if the new APR is lower and the term does not get so much longer that you pay more overall. Always compare the total amount payable, not just the monthly payment.

When to get help

If the payments are beyond your means and you start falling behind:

• Talk to your lender before arrears build up. Banks often agree to payment holidays, longer terms or restructuring – much more willingly than after months of missed payments.
• Use free help. Most countries have free debt advice services; in Poland there are free legal aid points in every district, and the Financial Ombudsman helps in disputes with banks.
• Avoid "quick loans to repay loans". It is the easiest route into a debt spiral.
• Personal bankruptcy is a last resort, but it exists and can be a solution in hopeless situations – get legal advice first.

In short

• List all your debts with the balance, APR, payment and due date.
• Paying only the minimum is very expensive – every extra 50 shortens repayment.
• Snowball: smallest debt first (motivation). Avalanche: most expensive first (least interest).
• What matters most is a steady surplus and not taking on new debt.

Educational material, not financial or legal advice. Calculations are simplified (fixed interest rate, interest charged monthly); amounts are in any currency.

Photos: Unsplash.