Many households have experienced a significant change in their circumstances. New or heightened financial pressures may be causing stress within your home and relationships.
The good news is there are steps you can take to manage your debt. With a plan in place, you can potentially pay off owed money faster, get ahead on your repayments, and enjoy the peace of mind that comes with financial security.
If you are in urgent financial need, there are places to turn to for help. See a list of resources at the end of this article.
Gain clarity on how much you owe
The first step in tackling your debt is understanding exactly how much you owe. It can be all too easy to push debt to the back of your mind. Unfortunately, this can prevent you from seeing the bigger picture.
Write a list of all your debts, including loans, credit cards, fines, unpaid bills, and any other funds you owe. Then, detail the following:
- The total value of each debt
- The minimum monthly repayment (if applicable).
Finally, add up your debts to determine the total money owed. This number can be confronting, but remember that this is the first step in regaining control over your finances. You’re headed in the right direction.
Declutter your expenses
Many of us fall into the trap of subscribing to a streaming or music service, only to never use it. Month after month, money is automatically deducted from our bank accounts to pay for something we don’t want or need. And that is wasted funds.
Work your way through your transactions to understand where your money is going, paying particular attention to subscription services. Then, decide what can stay and what can go.
Create a realistic budget
Budgeting, when done properly, can be the single most powerful means of managing and eliminating debt. When creating a budget, keep the following in mind:
- Be realistic with what is and isn’t financially possible
- Prioritise your expenses, paying for things like your mortgage, groceries, and debt repayments before new clothing and eating out
- Stick to it – consistency is the key to managing debt successfully.
You might like to use a budgeting tool to help you keep track of your spending.
Prioritise your debts
If you are facing multiple debts, take the time to prioritise them. Generally, it’s recommended to eliminate your smallest debt first, ensuring you can still meet minimum monthly repayments on all other debts.
From there, you can come up with a sustainable repayment plan. You might like to talk to your bank, landlord, or providers about requesting support for financial hardship.
Future-proof your money
Give yourself the gift of financial security and consider directing any surplus cash into an emergency fund. Ideally, your emergency fund should cover about three months of essential expenses.
There is a way out of debt
Your financial past doesn’t have to define your financial future. It is possible to overcome debt and manage your money so that you can thrive. With a clear picture of how much you owe, a realistic budget, and determination, you can get back on top of your finances, relieve financial pressure, and minimise money-related stress.
We are living through uncertain times. Please do not hesitate to reach out to the resources listed below if you require assistance or support.
Need urgent financial help?
Please visit the following resources for urgent help with money:
- National Debt Helpline
- Apply for Coronavirus-related government assistance
- The Salvation Army
- The St Vincent de Paul Society
- Apply for a Centrelink crisis payment
- For emotional support, visit Lifeline and Beyond Blue
This article is intended to provide general information of an educational nature only. It does not have regard to your objectives, financial situation or needs and must not be relied upon as financial product advice. Before you act on this information, you should consider whether it is appropriate for your circumstances. Applications subject to credit approval and fees and charges are payable. Terms and conditions apply and are available on request. Information in this article is current as at the date of publication.
