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Budgeting and debt, without the lecture

A working budget is four numbers. Which debts you pay first matters more than any of them, and it is not the one shouting loudest down the phone.

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The short answer

A working budget needs four numbers: what comes in, what must go out, what you owe, and what is left. Priority debts such as rent, council tax and energy come before credit cards, whatever the collector says. If what is left is negative, free debt advice from StepChange, National Debtline or Citizens Advice is the right next step.

4 numbersAll a budget needs
60 daysBreathing Space protection
£0What free debt advice costs
3 monthsBuffer to aim at
What is on this page
  1. Start with the four numbers
  2. Priority debts come first, always
  3. If the numbers do not work
  4. The order to pay things off
  5. Then build a buffer
  6. The rest of this section

Start with the four numbers

A budget is not a spreadsheet with forty rows. It is four numbers, and most people can find them in twenty minutes.

1

What comes in

Take-home pay, benefits, tax credits, maintenance, anything regular. Use the lowest recent month if your income moves.

2

What must go out

Rent or mortgage, council tax, energy, water, food, insurance, travel to work. These are the bills that cause real trouble if missed.

3

What you owe on

Every credit card, loan, overdraft, catalogue and buy now pay later agreement. Balance, rate and minimum payment.

4

What is left

Income minus must-go-out minus minimum debt payments. That number, positive or negative, decides everything that follows.

The free MoneyHelper budget planner does the arithmetic if you would rather not.

Priority debts come first, always

Not all debts are equal. Some can take your home, your liberty or your energy supply. Those get paid first, whatever a credit card company says on the phone.

Priority Why What can happen
Rent or mortgage It keeps a roof over you Eviction or repossession
Council tax Councils have strong powers Bailiffs, and in rare cases prison
Gas and electricity Supply can be affected Forced meter or disconnection
Court fines Enforced by the courts Bailiffs or prison
TV licence A criminal matter Prosecution and a fine
Tax and National Insurance HMRC has direct powers Direct recovery from your account

Credit cards, overdrafts, catalogues and personal loans are non-priority. They matter, and they come second.

Debt collectors for non-priority debts are the loudest. That is a collection tactic, not a reflection of who has real power over you.

If the numbers do not work

If what is left is negative, budgeting harder will not fix it. That is a structural gap, and there are proper routes out of it.

Free debt advice is available from StepChange, National Debtline and Citizens Advice. None of them charge, and none of them will judge you.

There are also legal protections most people have never heard of. Breathing Space gives up to 60 days where most interest and charges are frozen and most creditor contact and enforcement action is paused on the debts included. A debt adviser applies for it on your behalf.

Our debt help page sets out every formal option, what each one costs and what it does to your credit file.

Not sure whether your situation needs a debt charity?

Tell us roughly where you are. We will point you at the right free service, and we are not paid to send you anywhere.

Ask us a question

Prefer WhatsApp? Message us there. We are open Monday to Saturday, 9am to 8pm.

Free debt advice is available from StepChange, National Debtline and Citizens Advice. We are not paid to send you there. Talking to us costs nothing either, and there is no fee to you for anything we arrange.

A laptop and household bills on a kitchen worktop

The order to pay things off

Priority debts firstArrears on rent, council tax or energy come before anything else, even if the interest rate is zero.
Then the highest interest rateMathematically this saves the most money. Overdrafts and store cards are usually the worst offenders.
Or the smallest balance firstClearing one account entirely gives momentum. If motivation is the obstacle rather than arithmetic, this wins.
Keep the minimums goingWhichever order you choose, keep paying the minimum on everything. Missing one to overpay another costs more than it saves.

Then build a buffer

Debt-free with no savings means the next broken boiler puts you straight back. A buffer is what breaks that cycle.

Start with a target of £500. Then three months of the must-go-out number. It does not need to be exciting, it needs to exist.

Our emergency savings page covers how much, where to keep it, and when to use it.

The rest of this section

Each of these goes deeper on one part of the picture.

Emergency savings

How much you need, where to keep it, and the difference between a buffer and a sinking fund. Read the guide.

Credit score

What lenders actually look at, how to check your file free, and what does and does not move it. Read the guide.

Debt help

Every formal option from Breathing Space to bankruptcy, priced and compared. Read the guide.

Household bills and paperwork spread across a kitchen table

Who this suits, and who it does not

This section helps if
  • You are not sure where your money goes each month
  • You are paying minimums and the balances are not moving
  • You want to know which bills really come first
  • You are building a buffer for the first time
Go straight to a debt charity if
  • You are missing priority bills such as rent or council tax
  • You are borrowing to pay other borrowing
  • Bailiffs have contacted you
  • The gap is structural rather than a matter of spending habits

Check broadband before you make an offer

Broadband speeds can vary street by street, so check the exact address before you commit. Ofcom's free checker shows which broadband speeds and mobile coverage are available at any UK property.

Check broadband at an address (Ofcom)

Want all your bills in one?

We can introduce you to a specialist who can combine your mobile, broadband and utilities into one bill. There's no fee for the introduction.

We don't provide these services ourselves. Switching household bills is not a regulated financial service, so FCA protections and the Financial Ombudsman do not apply. We'll only pass your details to the specialist if you ask us to. See our privacy notice.

Questions people actually ask

Where do I start if I am in debt?
List every debt with its balance and rate, separate priority from non-priority, and work out what is left after the bills you must pay. If that number is negative, contact a free debt charity rather than trying to budget your way out.
Which debts should I pay first?
Priority debts, which are rent or mortgage, council tax, energy, court fines, TV licence and tax. Those have the strongest consequences. Credit cards and loans come after them.
Is debt advice really free?
Yes. StepChange, National Debtline and Citizens Advice all give free debt advice. Any firm charging you a fee to arrange a debt solution is selling you something you can get free.
What is Breathing Space?
A legal scheme in England and Wales giving up to 60 days where interest and charges stop and creditors must stop enforcement action and most contact about included debts. You apply through a debt adviser, and it is free.
How much should I keep in savings?
Start with £500 to cover a small emergency, then build towards three months of core outgoings.
Should I use savings to pay off debt?
It depends on the cost of the debt, what the savings earn and whether you need a buffer. Clearing everything and leaving nothing accessible tends to put people straight back on a credit card.
Will getting debt help hurt my credit file?
Formal solutions such as a debt management plan, an IVA or a Debt Relief Order do affect it. So do missed payments. Getting help early usually does less damage than waiting.
Can I be sent to prison for debt?
Not for ordinary consumer debt. Council tax and court fines are the rare exceptions where imprisonment is theoretically possible, which is why they are priority debts.
How do I check broadband speed at a property?
Use Ofcom's free broadband and mobile checker at checker.ofcom.org.uk. Enter the property's postcode and choose the address to see which broadband speeds and mobile coverage are available before you make an offer.

Where to go next

Emergency savingsHow much, and where to keep it.Credit score explainedWhat lenders actually see.Debt help explainedEvery formal option compared.Cutting household billsWhere the real savings are.Cannot pay a bill?What to do this week.Income protectionCover for the income the budget depends on.
Where these figures come from

Figures checked on 1 September 2026 and correct for the 2026/27 tax year. Rates change, so check the source before you act on a number.

We do not give regulated debt advice and we are not paid to refer you anywhere for it. The charities named on this page are free.

Last reviewed September 2026.

Get the numbers straight first

If the budget works and you want to protect the income behind it, that is a conversation we can have directly.

Start a conversation

Prefer WhatsApp? Message us there. We are open Monday to Saturday, 9am to 8pm.

Free debt advice is available from StepChange, National Debtline and Citizens Advice. We are not paid to send you there. Talking to us costs nothing either, and there is no fee to you for anything we arrange.