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8 tips to help you get out of debt

2 May 2019 | 6 min read
Just as we are all able to get into debt, we’re all able to get out of debt. There is no magic bullet, but these tips can help you along the way.

We all need a bit of help to find the forest through the trees sometimes. Trying to get out of debt is no different. A whopping three-quarters of Australian households are in debt with over half of that coming from credit cards alone.

When it comes to personal debt we are, shockingly, the 5th most in-debt country in the world.

Just the idea of debt can overwhelm some people, and the lengths we’ll go to avoid confronting it can be nothing short of a comedy routine. Squinting through one eye, opening your monthly statement just enough to see the minimum repayment before swiftly scrunching it up to chuck straight in the recycling bin, never to be seen or read again. Sound familiar?

We’ve all been there.

The hardest part is making the commitment to get out of debt. If you’re reading this, chances are you’ve made that commitment. And if not, hopefully this article will help you along the way.

Let’s start with the good news:

  • Debt is temporary. Seeing the bills stack up every month might feel like a life sentence but it's not.

  • If you've made the commitment to get out of debt, today is the most in-debt you'll ever be. The new habits you'll learn on this journey will be with you for life.

There’s no magic bullet when it comes to clearing debt. It takes hard work, determination and sacrifice. While that might in itself might seem overwhelming, remember that you are at the beginning of a journey that will change your life as you know it.

Here are some tips to help you along the way.

Start your budget

Writing a budget isn’t everyone’s cup of tea. The thing is though, they really do work. The key is to find one that works for you. Whether you’re a whiz at spreadsheets, someone who works better visually or anything in between, there is a system that will work for you.

All you need is to be able to clearly list your expenses and your income, in a way that’s easy to edit the numbers.
Take your time to find a simple budget planner that works for you. Or, you can try ours here.

Find out how much you need “to keep the lights on”

It can feel like you have a mountain of figures floating around when you’re trying to get on top of your finances.
This number will form your initial base living expenses each month. The idea behind finding out how much you need “to keep the lights on” is to centralise your expenses and learn exactly where your money is going.

Include rent, mortgage repayments, land rates and utilities – gas, water, electricity. Add these in the ‘expenses’ section of your budget. If you need a hand converting irregular bills to monthly figures, check out the ‘Calculation Tips’ section at the bottom of this article.

Knowing this number will mean you know how much you need to earn at an absolute minimum each month, which can help to take the pressure off a bit.

Face your debt. All of it.

This part can get pretty overwhelming. There might be anxiety, tears, or you might even wish to time-travel back in time to slap the credit card out of the hand of your former self. These are all very normal feelings. Remember, this isn’t going to be easy.

Locate your debt and read through each of your statements, one by one. Familiarise yourself with these parts of the statements:

  1. Any monthly or annual fees

    Include these fees as expenses in your budget. We’re building a version of your budget that is reflective of the situation you’re in today, so be sure to include all fees, no matter how small they might be.

  2. The minimum monthly repayment.

    Add this into your budget as a monthly expense for now. This number might change as you move through your debt-clearing journey, if you add more money to it

  3. Your interest rates

    An important part of this process is learning about money. Being aware of your interest rates will keep you more informed of your debt, and help you start learning how much debt can really cost you.


If you have a personal loan with only $200 left that you’re planning to pay off in the next 4 weeks – include it in your budget. If you have a low-interest credit card with a $40 annual fee that doesn’t feel like much, include that too. Every dollar counts.

In order to be able to build a strategy to re-pay your debt, it’s important to be able to see exactly what kind of a financial position you’re in. Warts and all.

Get real with your expenses

The thing to remember when first putting your budget together is to write it for the person you are today. The idea is to see exactly where you spend your money so you know where you can afford to cut down from, to help you become the person you want to be.
For now, write down all the expenses you incur on a monthly basis. Consider adding the following:

  • Groceries;
  • Public Transport, Ubers and Taxis;
  • Phone and Internet bills;
  • Streaming services like Netflix, Stan, Spotify or Apple Music;
  • Medical bills, Private Health Insurance;
  • Shopping for new clothes, shoes;
  • Personal grooming – Haircuts, salon visits, massages, etc.

If you are unsure of what figure to put, look through your bank statements from the last six months and average it out to a monthly figure.

Take a break and crunch some numbers

Now that you’ve worked out how much your debt repayments are, and where your money is being spent, it’s a great time to look at opportunities to re-pay a bit more on your debt.

For example, imagine you have a $10,000, 5-year personal loan with an interest rate of 7.79%. By paying an extra $50 on each month, you can stand to save over $500 that you would have otherwise paid in interest throughout the life of your loan.

To some, saving $500 over 5 years doesn’t sound like much at all. After all, it only works out to a couple coffees a month, right?!

If you were to be handed $500 today, would it feel different? At the end of the day it is the same value. Every dollar counts.

Browse our calculators here and see how much you can stand to save.

Note: This article contains general advice only. Readers should seek a trusted professional’s advice on financial matters.

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