Debt2 min read · Updated 21 October 2026
In debt and no savings? The order to fix it, with numbers
The order to tackle debt, savings and pension when money is tight, with a worked example showing how paying the highest rate first saves thousands.
The order
- A one-month cash buffer, so one bill does not put you back on a card.
- Your workplace pension up to the employer match.
- Pay off debt above about 10% interest, highest rate first.
- Grow cash to three to six months of costs.
- Then ISA and pension.
A worked example
Debts: £4,000 at 25% with a £120 minimum, and £8,000 at 9% with a £200 minimum. Minimums only: 4.8 years and £4,435 of interest. Add £700 a month, aimed at the 25% card first: 1.2 years and £815. Saving: about £3,620.
Highest rate first
This is called the avalanche method. It always costs least. If you need quick wins to stay motivated, clearing the smallest debt first costs a little more but works for some people.
Get free help
MoneyHelper and StepChange give free, impartial advice. If minimum payments do not cover the interest, talk to your lender about a payment plan before you miss a payment.
Common questions
Should I save or pay off debt first?
Build a small buffer, then attack debt above about 10% interest.
What is the debt avalanche?
Paying minimums on all debts and sending spare money to the highest rate first.
Should I stop pension payments?
Keep paying enough to get the full employer match. It is free money.