6 Steps to Kicking Your Debt in the New Year

Oregonians Credit Union Dec 31, 2025 2 min

It’s a new year — and what better way to start fresh than by finally kicking your debt to the curb? If your credit cards, loans or lingering balances have been weighing you down, now’s the time to reset, refocus and get serious about reclaiming your financial freedom.

Here are six steps for tackling your debt head-on in the new year.

1. Know what you owe

The first step in any debt payoff journey is to get brutally honest about your numbers. Make a full list of your debts and note the balance, minimum payment and interest rate on each.

2. Choose a payoff strategy that fits your style

There are two main methods when it comes to paying off multiple debts; choose the one that best suits your personality.

Avalanche method. Pay off the debt with the highest interest rate first while making minimum payments on the rest. This saves the most money in the long run.
Snowball method. Pay off the smallest balance first, then move on to the second-smallest. Quick wins will keep you motivated, but you’ll be paying more interest overall.

3. Cut out unnecessary spending

Cutting back on unnecessary expenses for a few months can give you a serious head-start on your goals.

4. Use “extra money” wisely

Tax refunds and holiday bonuses can become powerful tools in your debt payoff journey. Instead of spending these small windfalls, apply them directly to your highest-interest debt.

5. Consider a balance transfer or refinance

If high interest is keeping you stuck, there are steps you can take to reduce it.

First, consider a balance transfer credit card. These cards allow you to transfer a debt balance to a new 0% interest card. The only catch is that the zero-interest feature will come to an end after an introductory period of 12-18 months, so be sure to pay it off in time.

Another option is a debt consolidation loan. Here, you’ll roll multiple debts into a single, lower-interest monthly payment, such as a personal loan. This makes your debts easier to manage and saves on interest.. .

6. Automate and track

Automate your minimum payments so you never miss one, and set up extra payments for your top-priority debt. Set aside time every month to review your progress and verify that you’re still on track.

Make this the year you stop just managing your debt—and start crushing it.