Living on a Tight Budget? How One Millennial Cut £125k in Debt With Extreme Frugal Tactics

Big debt can feel overwhelming—especially for millennials facing student loans, car payments, and credit cards. But with a smart plan and serious commitment, even the largest balances can shrink faster than you think. Just ask the woman who tackled over $165,000 (£125,000) in debt by living simply, spending only on essentials, and channeling more than $2,000 each month into loan payments. Here’s how anyone can follow her lead and use proven tactics to kick big debt to the curb, no matter how tight your budget feels.

Map Out Your Debt and Prioritize Payments

The first step in getting out of debt is understanding exactly how much you owe—and to whom. That means gathering every student loan, car loan, credit card, and even small forgotten payments into one big list. Once you see your total debt clearly, you can start planning your attack.

Focus on your highest-interest debts first—the ones charging the most money every month just for borrowing. This approach, called the ‘debt avalanche,’ is like putting out the hottest fire before worrying about the smaller ones. For example, if you have a credit card debt at 20% and a car loan at 6%, paying off the credit card first will save you more money in the long run.

“When you’re carrying multiple debts, always check which one’s costing you the most. Even paying a little extra can make a big difference on high-interest loans.”

Some people find motivation with the ‘debt snowball’—paying off the smallest debts first to enjoy quick wins. Both methods work—the important thing is to pick a strategy and stick with it.

To keep your plan moving:

• Set up automatic payments so you never miss a due date. This helps you avoid late fees and keeps you on schedule.
• Track your balances every month so you can celebrate progress and spot any trouble quickly.

Getting organized might sound boring, but it’s a power move on the road to zero debt. Take half an hour this week to list every balance—and remember, any progress is good progress!

Slash Spending and Free Up Cash to Pay Off Debt Faster

Once you know your numbers, it’s time to look for money hiding in your budget. Tracking every penny can unlock spending habits you didn’t even realize you had. For the woman who cut her debt in half, that meant living on a bare-bones budget—canceling subscriptions, packing lunch instead of eating out, and skipping fancy shopping trips.

If you’re not sure where your money is going, try printing out your last few months of bank or credit card statements. Circle anything that isn’t a basic need—like rent, groceries, or essential bills. Sometimes, dozens of little charges add up to hundreds you can redirect toward debt.

Even small steps help. Calling cell phone or utility providers and asking for a better rate might take 10 minutes but could save you $20 or more a month. Lowering credit card use—especially if you keep balances below 30% of your limit—not only cuts interest but can boost your credit score, making life cheaper in the future.

“A budget isn’t a punishment—it’s a map that shows you where your money likes to wander off.”

If your budget feels squeezed to the max, look for new ways to bring in cash. That could be freelancing, a side hustle, or even selling unused items from around your home. Putting all extra income straight onto your highest-interest debt can make the balance drop in a hurry.

Ready to take charge? Pick one expense to cut this week and set up automatic payments—your future self will thank you!

Stay Prepared and Make Debt-Free Living Stick

Paying off debt quickly is an amazing achievement, but staying debt-free can be just as tricky. Building a safety net keeps you from slipping back into old habits or facing surprises unprepared. Experts recommend creating an emergency fund—enough to cover three to six months of living costs. That way, a flat tire or lost job won’t send you running to a credit card.

Saving for emergencies doesn’t have to mean stashing away heaps of cash right away. Start with a smaller goal, like $500 or $1,000. Even a small cushion can save you big headaches.

“Your emergency fund is your financial shield. Even a little bit goes a long way when life throws you a curveball.”

If you’re struggling to save while paying off debt, try this: Split extra money (like tax refunds or gifts) 80/20 between debt payments and your emergency fund. That way, you attack your balances but still build a safety net.

Finally, don’t be afraid to call your lenders and ask for help. Could your credit card company lower your interest rate, or can you refinance a student loan for better terms? Negotiating just one lower payment or reduced fee can free up money every month. It never hurts to ask—and sometimes lenders say yes.

Keep checking your budget and celebrate each milestone along the way. Share your progress with friends or online groups. And remember, you’re not alone—lots of people are getting out of debt the same way, one step at a time.