Managing Debt Repayment - What to Pay Off First?  

January 21 2025

Managing debt can feel overwhelming, but with the right approach, it’s possible to take control of your finances. With 6.7 million people in Britain facing financial difficulties as of March 2024, effective debt management is more crucial than ever. Source: The Guardian

The below information does not constitute financial advice and should not be considered as such. It is intended to support individuals by signposting them to relevant services that may be able to support them.

1. Start with High-Interest Debt

High-interest debts, such as credit cards, can quickly add up. Paying off these debts first helps reduce the amount of interest you pay in the long run. Once you’ve tackled the high-interest debts, focus on the lower interest rate debts.

2. Secured vs Unsecured Debt

Secured debts, like mortgages, are tied to assets such as your home, while unsecured debts, such as credit cards, are not. Prioritising secured debts can help prevent the risk of losing your property, but each situation is different.

3. Budgeting Can Make a Big Difference

Creating a simple budget helps you track your income and expenditure. This makes it easier to allocate money toward debt repayments and avoid missing payments. A clear budget also helps you set realistic financial goals.

4. Avoid Common Pitfalls

It may seem satisfying to pay off smaller debts first, but if higher-interest debts are left unpaid, they can grow quickly. Finding a balance between making progress and effectively managing your debt is key.

5. Start Planning for the Future

Once you have a handle on your debt, start saving for unexpected expenses or emergencies. Having an emergency fund prevents you from relying on credit when life throws curveballs.

Don’t suffer alone.

Managing debt doesn’t need to be overwhelming. Focus on high-interest debts first, understand secured vs unsecured debts, and stick to a clear budget to regain control of your finances.

If you are facing financial difficulties and need support, consider reaching out to a professional debt advice agency. There are many free, impartial services available that can help guide you through your options.

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