Paying off debt: create a plan you can stick to

You make payments on your loans every month, but it might feel like little is changing. How much do you still owe? Which debt should you tackle first? And when will you finally be done?

A repayment plan makes this clear. You list your debts, choose a sustainable monthly amount, and decide where any extra money should go. This way, you can see exactly which steps to take.

Calculate your repayment plan

How to start paying off debt?

Start with three things: what you still owe, what you can spare each month, and the agreements you have with your lenders. Afterward, you can compare how a different repayment order or an extra amount would change your timeline.

Are you unable to pay your regular bills or agreed installments? Then seek help to create a sustainable plan first. At the bottom of this page, you can read where to go for help.

Step 1. List your debts

For every loan, note down:

Who you are paying.
The remaining balance: your outstanding debt.
The interest rate you are paying.
The amount you have to pay every month.
Whether you are allowed to make extra repayments and under what conditions.

You can usually find this information in your online loan overview or contract. Don't know your outstanding balance? Request an up-to-date overview from your lender.

The original loan amount minus all monthly payments made is usually not your outstanding balance. With an interest-bearing loan, your monthly payment consists of both interest and principal.

Deferred payments and payment plans should also be included in your overview. Note the final payment date and any associated costs.

Step 2. Determine what you can afford

A plan works better if it fits your everyday life. So look beyond just what is in your account today.

Subtract your fixed expenses, groceries, agreed loan installments, and other outgoings from your net income. Also, take into account costs that arise later, such as maintenance, clothing, and annual bills.

What remains can be divided between savings and extra repayments. Do not count your existing loan installments as extra repayment capacity.

Keep money aside for unexpected expenses. A suitable buffer varies per household. The Nibud Buffer Calculator helps you determine this.

You don't have to choose a large extra amount immediately. An amount that you can consistently afford is a better starting point for a sustainable plan.

Step 3. Choose which debt to pay off extra

Can you pay all agreed installments and do you have money left over? You can then target that extra amount.

There are two well-known methods:

Highest interest first. You focus your extra repayment on the loan with the highest interest rate. All else being equal, this limits your interest costs.
Smallest debt first. You focus your extra repayment on the lowest outstanding balance. This allows you to cross a loan off your list sooner.

With both methods, you continue to pay the agreed amounts on your other loans. Making an extra repayment on one debt does not mean you skip any other payments.

Step 4. See what changes with extra repayments

With an interest-bearing loan, an extra repayment reduces the amount on which you pay interest afterwards. If your regular monthly payment stays the same, you can be finished sooner.

A fictional example: a balance of €10,000 at 8% nominal annual interest. At €200 per month, repayment takes 62 monthly payments. If you pay €300 per month from the start, it takes 38 monthly payments. The total interest drops from approximately €2,204 to €1,347.

That's 24 fewer monthly payments and about €858 in interest savings. We calculate this with 8% / 12 interest per month, payment at the end of the month, no fees, and a smaller final payment. Your own result depends on your contract and details.

Step 5. Reallocate freed-up monthly payments

Is a loan completely paid off? Then that monthly payment obligation disappears. If your financial situation allows it, you can use that amount for the next loan.

Suppose you paid €75 per month for a loan that is now finished. You were already paying €150 for another loan. By reallocating that €75, you now pay €225 for that other loan. Your total monthly budget for debts does not increase.

This reallocation can be done with both repayment methods. The snowball method combines it with paying off the smallest debt first.

Step 6. Calculate when you'll be debt-free

An expected end date makes your plan concrete. You can see what your current payments mean and what changes if you make extra repayments.

Review your plan again if your income, interest rates, or expenses change. An end date is a calculation based on assumptions, not a promise that your situation will remain the same.

What if you don't have enough money to pay?

If you are unable to pay your bills and loan installments, a different repayment order alone is not enough. Contact the organization you owe money to and ask for help.

At Geldfit (in the Netherlands), you can ask your question for free and anonymously by calling 0800-8115. Geldfit can help you think through your situation and, if you wish, connect you with local support. Your municipality can also help with financial worries and debts.

Frequently asked questions

Can I pay off debt without extra money?

Yes. With an amortizing loan, you are already paying off part of your debt through the agreed installments. You can also consider whether you want to reallocate any freed-up monthly payments later. You don't have to choose an extra amount that you cannot afford.

Do I have to pay off my largest loan first?

Not automatically. The interest rate, the outstanding balance, and the terms together determine which choice fits. The largest loan is not necessarily the loan on which an extra euro saves the most interest.

Should I use all my savings?

First, check what expenses you expect and what buffer you need. Money used for repayment is no longer immediately available for an unexpected bill.

Does this also apply to my mortgage?

This explanation focuses primarily on regular loans and installments. With a mortgage, tax implications and early repayment fees can play a role. The AFM explains early mortgage repayment.