How to Get Out of Debt — Step-by-Step Plan for Europeans

Why debt is more dangerous than you think

Debt is not just a number on a screen. It's compound interest working against you. The same mechanism that makes investments grow — at a credit card APR of 20–25% per year — works in favour of your lender, not you.

Consider this example: you have €2,000 on a credit card with a 22% APR. You pay the minimum each month — typically 2–3% of the balance. At that pace, clearing the debt entirely will take over seven years, and you'll end up paying roughly €3,400 in total instead of €2,000. That's €1,400 extra just for using the card.

The emotional cost of debt

Psychological research consistently shows that personal debt correlates with higher anxiety, sleep problems, and a sense of lost control. Many Europeans fall into a cycle: stress from debt → impulsive spending as relief → more debt → more stress. Getting out of debt is not just a financial decision — it's a decision about your quality of life.

According to the ECB's Consumer Finance Survey (2024), nearly one in three European households reports that debt repayment is a significant or very significant burden on their monthly budget. You are far from alone — and there is a clear way forward.

Step 1: Count exactly how much you owe

Before you choose a repayment strategy, you need the full picture. Most people have a rough idea of their debt — but "roughly" isn't enough for planning.

Your debt inventory — what to record

For every debt obligation, you need four pieces of information:

• 1.
  Current balance — exactly how much remains (not the original loan amount — the present outstanding balance)
• 2.
  Interest rate / APR — the annual percentage rate you pay your lender
• 3.
  Minimum monthly payment — the lowest amount you must pay to avoid late fees and credit score damage
• 4.
  Repayment end date — when the obligation ends if you only ever pay the minimum

Common debt types across Europe

The Debt Snowball Method — start with the smallest

The debt snowball is a repayment strategy where you pay off debts from smallest balance to largest, regardless of interest rate. You pay the minimum on every debt except the smallest — on that one, you throw every spare euro.

Once the smallest debt is gone, you take its former payment and add it to the next smallest. That's the "snowball" — the amount you roll towards the active debt grows every month.

An example in numbers

Imagine three debts:

• ✓Debt A: €600 — credit card overdraft (min. payment €30)
• ✓Debt B: €3,200 — personal loan (min. payment €100)
• ✓Debt C: €8,000 — car finance (min. payment €200)

You have €450 per month for instalments, plus €120 extra. Using the snowball: pay the minimum on B and C (€300 total), and direct €150 (€30 min + €120 extra) towards Debt A. Debt A disappears in roughly 4 months. Then the full €150 rolls onto Debt B — cutting its repayment from 32 months down to 17. And so on.

Why the snowball works psychologically

Research from the Kellogg School of Management and studies by Dave Ramsey's organisation show that people who eliminate small debts first are significantly more likely to complete their repayment plan. Each closed account is a small win that releases dopamine and sustains motivation. That's why the snowball has a higher completion rate than mathematically optimal strategies, despite costing slightly more in interest.

The Debt Avalanche Method — minimise total interest

The debt avalanche works the opposite way: you repay debts from highest APR to lowest. You pay the minimum on all debts and direct every spare euro at the most expensive one first.

Mathematically, this is the optimal strategy — you'll pay less total interest. But it requires more patience: if your highest-APR debt is also your largest, you may go months without the satisfaction of a "closed" account.

When the avalanche is better

• ✓You have a high-APR debt (a credit card at 22%+) absorbing hundreds in interest every month
• ✓You care more about minimising total cost than about psychological "wins"
• ✓You have strong internal motivation and won't give up without quick milestones

How much interest you can save

On the three-debt example above (totalling ~€11,800), the difference between the snowball and avalanche is typically €200–€800 less in total interest with the avalanche. The higher the APR on your most expensive debt, the greater the saving.

Snowball or avalanche — which method is right for you?

There's no universally correct answer. Both methods work — provided you stick with them. The question is which fits better with how you're wired.

How to build a budget while repaying debt

A repayment strategy without a budget is like a road trip without fuel. Your budget is the tool that finds the money for overpayments — and ensures every spare euro goes to the right place.

The Martia Priority Ladder — for debt repayment mode

When you're paying off debt, your spending hierarchy should look like this:

• 1.
  Absolute essentials — rent/mortgage, food, utilities, medications
• 2.
  Minimum payments on all debts — to avoid penalty interest and credit score damage
• 3.
  A small emergency buffer (€500–€1,000) — without it, every car repair or medical bill goes back on the credit card
• 4.
  Overpayment on the active debt — every euro of remaining surplus
• 5.
  Everything else — wants, treats, lifestyle — with what remains

Where to find money for overpayments

You don't need to earn more to repay debt faster. Often it's enough to audit your spending and find €100–€300 per month "hidden" in subscriptions, takeaways, and impulse purchases.

Typical categories where Europeans quietly lose €150–€400 per month:

How to repay debt faster — 6 proven approaches

Every extra euro directed at an overpayment shortens your repayment timeline and reduces total interest. Here's where to find those euros:

• 1.
  Subscription audit

  Check your bank statement for the last three months and list every recurring charge. Cancel anything you don't actively use. Typical saving: €50–€150 per month.

• 2.
  Consolidate high-APR debts

  If you have several consumer loans and a credit card, check consolidation offers from your bank or a comparison site. Lower interest means more money going towards actual repayment. Be wary of lower instalments with a longer term — always compare the total cost of credit (APR), not just the monthly payment.

• 3.
  Sell unused items

  eBay, Vinted, Facebook Marketplace — go through your wardrobe, storage room, garage. A one-off injection of €200–€800 can wipe out a small debt entirely.

• 4.
  Direct windfalls to debt

  Annual bonus, tax refund, birthday money — before it evaporates into everyday spending, put at least 50% of any windfall towards your active debt.

• 5.
  Renegotiate your interest rate

  Many European banks will lower your rate if you have a good payment history and simply ask. Call and enquire — the worst that can happen is a no. The best case: a few percentage points shaved off, saving you hundreds over the life of the loan.

• 6.
  Freeze your credit card

  Literally put it in a glass of water and freeze it — or lock online purchases in your banking app. Your card must stop being a daily spending tool. If you pay off the balance and then keep spending on the card, you'll be back to square one within weeks.

Common mistakes when getting out of debt

Many people start a repayment plan with genuine enthusiasm, only to abandon it a few months in. Here's why — and how to avoid it.

• 1.
  No emergency buffer

  If you throw every spare euro at debt with no safety net, the first car repair, dentist bill, or broken appliance goes straight back on the credit card. Before starting aggressive repayment, set aside €500–€1,000 as an untouchable buffer.

• 2.
  Paying off debt and accumulating new debt simultaneously

  As long as your credit card is your go-to for everyday purchases, the debt will keep coming back. Repaying debt must go hand in hand with changing the habit that created it.

• 3.
  Hiding debt from your partner

  Shared finances require full transparency. Hidden debt almost always surfaces at the worst possible moment and damages trust. The conversation is difficult — but necessary. A 2023 YouGov survey found that financial secrecy is a leading cause of relationship conflict across Europe.

• 4.
  Treating consolidation as the solution

  Consolidation is a tool, not a cure. If you consolidate and then start spending again on the freed-up credit limits, you'll have the same problem in two years — plus a consolidation loan on top.

• 5.
  Not tracking progress

  Without regularly checking your balances, you can't see the debt shrinking. And visualising progress is one of the strongest motivators for staying on plan — even more powerful than knowing the strategy intellectually.

How to track your debt repayment progress with Martia

One of the biggest barriers to getting out of debt is lack of visibility. When you have accounts with three different banks and two separate loans, checking where you stand requires logging into each one separately. That's exhausting — and so most people simply don't.

Martia solves this: it connects to your bank accounts via Open Banking (PSD2) and shows live balances across all your accounts in a single dashboard. You can see in real time how every extra payment reduces your total debt.

Why tracking progress matters

Behavioural research shows that simply tracking spending reduces it by 10–15% — with no other change required. The observer effect works equally well for debt: regularly watching a balance fall motivates you to maintain discipline and avoid taking on new obligations.

According to a 2024 ING International Survey, Europeans who actively monitor their finances save an average of 2.3 times more than those who don't. The same principle applies to debt repayment — visibility is not just information, it's motivation.

Martia supports connections to major European banks via the PSD2 Open Banking framework — including N26, Revolut, Monzo, Wise, ING, BNP Paribas, Starling Bank, HSBC, and many more. As of February 2026, over 2,000 European banks are accessible through Martia's Open Banking integration.

Frequently asked questions