Colombo · Markets · MoneyDebt is easy to fall into and hard to climb out of, especially when high-interest credit cards and quick personal loans make borrowing feel painless. If you are juggling repayments and never seeming to get ahead, you are not alone, and there is a way out. It is not glamorous, but it works.
The principle: getting out of debt is a numbers game plus a habit change. You attack the debt systematically while stopping the leak that created it. Do both and the pile shrinks faster than you expect.
First, see the whole picture
You cannot fight what you cannot see. List every debt in one place: credit cards, personal loans, leasing, money owed to family, any pawned gold. For each, write down the balance, the interest rate, and the minimum monthly payment. Seeing the total is uncomfortable, but it is the moment things start to improve.
Pay special attention to the interest rates. Credit card debt in particular can carry punishing rates, which is why an unpaid card balance is often the most urgent fire to put out.
Choose an attack order
Two proven methods, pick the one you will actually stick with:
- The avalanche: pay minimums on everything, then throw every spare rupee at the debt with the highest interest rate. This saves the most money mathematically.
- The snowball: pay minimums on everything, then attack the smallest balance first. You clear debts quickly, and the early wins keep you motivated.
The best method is the one you finish. Avalanche saves more money; snowball keeps more people going. Both beat drifting.
Free up money to throw at it
Every extra rupee shortens the journey. Revisit your budget and find room: pause non-essential spending, renegotiate where you can, and redirect that money straight to your target debt. If your income allows, even a small fixed extra payment each month compounds into a much shorter payoff. Our guide to budgeting on a Sri Lankan salary can help you find the slack.
Be careful with 'solutions' that add risk
Some tools can help, others just move the problem:
- Consolidation (replacing several expensive debts with one lower-rate loan) can genuinely help, but only if the new rate is lower and you do not run the old cards back up.
- Pawning gold for cash is fast but risky: miss the redemption and you can lose the gold. Treat it as a last resort, not a routine fix.
- Borrowing from informal lenders at very high rates usually deepens the hole. Avoid.
Stop the leak and build a buffer
Paying off debt while still overspending is like bailing a boat without plugging the hole. As you pay down, build a small emergency fund (even Rs. 25,000 to start) so the next unexpected bill does not send you back to the credit card. Once the expensive debt is gone, redirect those same payments into savings and investments, you are already used to living without that money.
Your debt payoff plan
- List every debt with its balance and interest rate.
- Attack by highest rate (avalanche) or smallest balance (snowball).
- Free up extra money from your budget and aim it at one target.
- Use consolidation carefully; avoid high-interest informal lenders.
- Build a small buffer so you stop reaching for new debt.