How the colour coding method can help you pay off debt

Keeping track of multiple bills, credit cards and loans can be tricky. The colour coding method is a simple, visual way to organise your finances and stay on top of repayments. It helps you see exactly where you are with your money and make clear decisions each month.

What is the colour coding method?

The colour coding method is exactly what it sounds like. You assign different colours to different debts or spending categories. This gives you a clear visual picture of your financial situation at a glance. It’s similar to using highlighters in a planner or sticky notes on a calendar, only for your money.

For example, you might use red for urgent debts or bills that are due soon, yellow for medium-priority debts like smaller balances or later due dates, and green for debts that are already under control or nearly paid off.

Seeing your debts laid out in colour makes it easy to spot what needs attention and where you have some flexibility.

How it can help you pay off debt faster

Colour coding makes it simple to prioritise payments. Red debts get tackled first, so you know exactly where to focus. This can help reduce interest costs by ensuring high-interest debts are paid off sooner.

It also makes it easy to see your progress. Watching a red section turn green as you pay it off is motivating and can keep you on track, even when you have multiple debts. People who use visual tracking methods often say they feel more organised and confident with their repayment plan, and it can help you stick to your strategy.

Using colour coding alongside methods like the debt snowball or debt avalanche approach can make a real difference. For example, the debt snowball method focuses on paying off the smallest debts first to build momentum, while the debt avalanche targets the highest-interest debts first to save money. Colour coding lets you see both strategies clearly in one visual system.

Some people find that using this method can cut months off their repayment timeline simply by keeping them consistent and focused. Even small extra payments become easier to manage when you know exactly where to put them.

Getting started with colour coding

You don’t need fancy tools. A notebook, planner or spreadsheet works just as well. Start by listing all your debts including credit cards, loans, overdrafts or any other money you owe. Then pick three to five colours based on priority or urgency and update your list regularly as payments are made. Watching red turn to green is a satisfying way to track progress.

Celebrating milestones along the way also helps. Paying off a single debt or reducing a balance noticeably is a step closer to your money goals.

Tips to make it work even better

Choose bright, distinct colours so everything stands out. Keep the system simple and avoid too many colours. And combine colour coding with the envelope method, budgeting apps, or automatic payments to make repayment easier and more consistent.

If you like, you can also add a section for extra payments or bonuses. For example, if you get a cashback, gift or an income boost, assign a colour for “extra payments” so you can visually track how these small increases help reduce your debts faster.