Debt payoff 2026

[1AnotherOne]

Morning all,

anyone want to join in a tackling debt for 2026 thread?

As of today I have £18.4k debt. I have paid off 26% of my debt this year to bring it to this total.

I have two loans (£260pm and £350pm) both of which will finish this year in February and August so that will free up a good amount.

My biggest problem is impulsive spending so I’ve created a section in my notes to write down what I want to buy. If I’m still thinking about it after 60 days I will allow myself to buy it.

Is it best to pay off each debt at a time or throw any spare money across each of them?

I also need to get out of my overdraft this year and start building up a good amount of savings.

What are your plans for tackling debt in 2026?

That’s brilliant! I’ve managed to resist too.

closed down my Next, Klarna and PayPal credit accounts which feels very freeing.

Brilliant move, well done 👍

Great idea, I should close down my Klarna account too!

Yes do it!

knowing it’s not there anymore just takes so much pressure off. If it’s not an option I can’t use it.

Can I ask a possibly daft question, please?
I know that financial advisors obviously exist but are there professionally trained people who can look at your finances (like we are all doing in the thread) and guide you to through how best to reduce this debt? I'm thinking of a paid for service, rather than a charity or Citizens Advice etc. They would need to not be trying to sell products/investments/ pensions at the same time!
Do these people exist? If so, can you recommend anyone?

I've always wondered this & if they don't exist, what a great service to develop.
Thanks.

Check out the MoneySavingExpert Debt Free Wannabe forum. There’s so many great people on there - some work at StepChange, CAB, financial advisors etc. They give really brilliant advice for free.

Can I join please? We have about £13k as a personal loan which we took out to put in off road parking and some DIY bits round the house. Husband has £650 as his overdraft.
I've wrote down how much we spend on things per year that we have to pay e.g car service/MOT £300, boiler service £70 and divided the total amount by 12. This gives me a target of what we should be saving each month so we're not scratching around trying to pay for things. The target is £220 a month. I'm going to try and round this up to £300 to build up some actual savings in case anything happens that we weren't expecting. It would be nice to finish 2026 with savings!

The general advice is to avoid any organisation that charges. They usually offer the same as the free organisation so why pay for the advice when you can get it for free!
The money saving expert page has lots of good advice.
I listen to a lot of money advice podcasts. The Martin Lewis podcast, money box and you and yours all through BBC sounds.
What sort of thing would you like advice with?

i am going to try debt snowballing, I have £100 overdraft now after paying £650 in the last few months but I have 2 loans and a credit card totalling £10k. I only took the loans this year and honestly I can’t even tell you what I’ve spent the money on. It was such a gradual thing, a PayPal account that escalated then took a loan to pay that off etc. I can afford to pay £400 pcm on the CC but I just end up adding to it throughout the month. I’m tempted to pay off £1000 a month then spend on it so that the £600 I budget for food etc I can put onto the card, then gradually reduce my spending. My idea behind that is that then when the loans are paid, I can put that money onto the card so essentially the card would be the last thing I cleared off?

what’s other peoples plans?

I also have ADHD so impulse spending and dopamine seeking is such an issue for me.

jm thinking of gradually declutterring as I see them how much stuff I have, the kids have and realise that no one actually needs anything!

@Superscientist thank you. I think I need to sit down & work my way through things & look at what we owe & make a plan. An example would be, we over pay on the mortgage so it will end sooner, but instead, should we be using that money to pay off a loan earlier or put it towards our small emergency fund? I think I know the answer but I suppose just having some guidance would be reassuring.

I was initially thinking of this plan too… paying off more than I can afford on cc then using it, but using less.

I initially liked this idea as i would be able to see the balance go down quicker at the end of each month. But i have not done it as i don’t trust myself

Regarding the loan vs mortgage- which has the higher rate? Would you make even more in a savings account??

ie. our mortgage rate is 1.55%, the loan rate was 2.9%, savings rate is 4%+

I personally wouldn't be overpaying my mortgage if I didn't have an emergency fund. It would be better to build in financial resilience by having 3 months of mortgage payments or ideally 3 months of all essential bills.

After that it comes down to interest rates. You overpay debts with the highest interest rate, then highest term and save if you can get better rates then overpay periodically - so rather than over pay £100 a month put that into a savings account and when that's £1200 plus interest pay some off the debt as a lump sum.

Depending on the rates of your loan and mortgage I think I would be tempted to do this anyway. Put all the overpayments into a high interest account and every 3/6/12 months do one off overpayments. I'm with first direct and can put £300 a month into a regular saver at 7% interest. Over 12 months this would earn £136.50 in interest, you need to look whether overpaying the loan or mortgage would save you more or less than that in 12 months and work out what the correct balance between overpayments and savings

Martin Lewis has a page on when it's right to over pay your mortgage and things to be thinking about https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

If you are struggling to know where the money is going I would probably work on a budget and overpayments that can be managed without additional debt. The risk of paying off £1000 with the intention of then using it again is paying off £1000 and then adding £1200 on it.

I would look at having 1 or 2 months trying not to put anything at all on the card. Go through you finances for those months to work out what you need to live in a typical month. The amount that's remaining split between overpaying the card and keeping a buffer. At the end of the month see how much of the buffer is left and whether you want to use that to do a second overpayment. If you are paying off £400 at the start of the month and then having to put items on the card later in the month you can't afford to pay off £400.

What methods can you use to put in blockers between the want to spend and spending? Where do you do most of your impulse spending?

Is anyone else thinking about consolidating loans or other debt?

I’m paying my car at 11% APR and one of my loans at 9%.

I can get a combined loan to cover the rest of the balances at 5% instead. Surely it makes sense to switch? They both have 4 more years on them.

Per month I’d go from £634 a month for car plus loan
to £533.11 a month for the same (still for 4 years) and id actually own my car (has PCP on it currently).

Have I missed something here?

@BackyardBanshee in theory and with maths this works, please make sure you can over pay or pay it off early without penalties or owing interest for whole term
but most people are not in debt because of maths
were you making both payments before without using your overdraft
if so consolidate at lower rate but keep payment s the same that way you will be debt free in 3.5 years

There is an emotional side to money I deserve a treat etc it's only £10
there is research toshow that people that pay for everything on a debit card card rather than credit card spend at least 10-15% less so stop using a credit card and use your debit card, pay all bills straight after you are paid you can normally change dates

to get out of debt requires a change of mindset from debt is normal everyone is living the same, to I am a person that always spends less than I make,I am debt free and a, going to stay that way

also it can help to break it down instead of saying of saying I'm 20,000 in debt ( which can be overwhelming) say i will be debt free in 4 years so am paying £530 a month or if I'm really frugal and can pay £700 a month I'll be debt free in 3 years

I would build a small emergency fund about £1000 only ( most emergencies are about 400 a new washing machine or fridge freezer, a plumber call out, a burst tyre)
from maths it is better to have no emergencty fund and just use the credit card
but from a practical view point of how people actually work it is better to have emergency fund ( is it really urgent is it unforeseen is there another way or financing this or going without could I get it second hand)

How is everyone doing?

Dont have debt, never had debt other than mortgage since I was 20. I was brought up with a 'if you dont have the money to buy it you can't have it' attitude. S

Then why bother commenting on this thread? There is no medal or praise for you here.

Why the fuck are you on this thread then?

Has anyone got any updates on how they're doing?
I've been selling a few things on vinted so have been putting extra money to pay off my Argos card, only have £150 to go to get rid of it and then I can close the account. This is my most annoying debt as I'm paying off small amounts each month and then getting interested almost as much as I'm paying off so be glad to get rid of it.
Hope everyone else is having a successful January!

Not doing that great - no money until payday on the 4th 😫 I'm not sure how to tackle it though, snowball method? I have two credit cards, one with £80, and the other with £900. Then I have £200 on a Next account and need to clear the lowest so I can see progress.

But I know some people say pay the one with highest interest first... argh! It's a bit confusing 😕

I am doing ok. I have a loan of just under 10k so I have decided to save and pay down in chunks.
Have done a lot of selling and saving this month and think I’ll finish (payday on Monday) £500 up. This is only because of the selling and I’m long term sick so not spending much. I have gone onto half pay now plus+ SSP until i hopefully go back to work end of Feb so need to be frugal!

Have £50 left in my account and son needs new school shoes. We are going bowling tomorrow but using a free voucher we got from his party in summer. We like to do
a coffee and cake at the weekend too so should be able to cover everything. I good shopped and filled the car with fuel yesterday.

It feels so good to get to the end of January in credit and with a plan!

That is amazing! Well done! That will feel so good to close!

From a long term strategy paying off the debts with the highest rates first is the most cost effective way of managing debt. That said, there's also the emotional side of things and being able to go from 2 to 3 debts it can give you a boost and a bit of an incentive to keep going.

I can see how paying off the £80 debt first and then looking at the other two after this would have a benefit.

The best plan is the one that you can stick too! Have you got a plan for getting through to pay day. January can be a long month!

What's the difference in interest rates between the three debts?