10 Things You Can Do To Tackle Debt Right Now

When your debt only seems to increase, living life can become stressful and frustrating, you can’t sleep at night and your relationships are affected. One common emotion is feeling hopeless. You might feel like there’s nothing you can do right now to make progress on clearing your debt. Hopelessness can make you feel like giving up or, worse, ignoring the debt as it piles up higher. But regardless of what you owe, who you owe, and what your financial situation is right now, there are always options available to assist you get back in control of your debt situation.

Paying off debt and loans requires dedication, determination and persistence. But the most important step is being willing to admit you need help digging yourself out. Admitting you have a problem and seeking help means leaving your pride at the door.

But just know that you’re not alone. We might be good at cricket, but Australian’s are world champions when it comes to debt. This time last year the average household debt to income ratio was 200%. This means for every dollar we earned, we owed two dollars. Scary stuff right?

In fact, Australian’s are so used to using credit for each purchase that it’s almost unheard of to be debt free. But debt can destroy your financial dreams and personal life, making it impossible to get ahead.

How to pay off debt fast

While lenders often make it ridiculously easy to get into debt, paying it off is hard and can take years.  Fortunately, there are some very simple steps you can take to start on your journey out of debt fast.

1. Understand what you owe

The first step to beating debt is knowing what you’re up against; don’t be one of the many people who live in denial of their debt as it keeps piling up. Whether you are in full-blown denial and refusing to open your bank statements or bills or you are actually taking steps to deal with it, you can always stand to get an updated, more thorough understanding of your debt position.

To ensure you have a complete picture, here’s what you need:


  • Your most recent bill statements for all credit cards and loans.
  • Your credit reports, so you can check for accuracy and identify all recorded debts.
  • Your credit score to get an idea of whether you’re eligible for lower interest rates or for a debt consolidation loan.

Write down every debt you owe. Next to it, write the total amount you owe, the minimum monthly payment, the interest rate you’re paying and the due date.

Knowing exactly how much cash you’re essentially burning in interest repayments each month, when you could be investing it in your future financial freedom, might just be the motivation you need to start tackling your debt.


2. Create (and stick to) a bare-bones budget

If you really want to get on top of your debt, you’ll need to stop spending and cut your expenses as much as you can. One option is to create and use a bare-bones budget. This means cutting your expenses as low as they can go and living on as little as possible for as long as you can.

A bare-bones budget will look different for everyone, but it usually only includes the necessities such as food, shelter and utilities and no discretionary spending. What you shouldn’t include:


  • Eating out/take away
  • Entertainment services such as Netflix or Foxtel
  • Magazine subscriptions
  • New clothing and shoes
  • Holidays
  • Recreational activities/hobbies
  • Household items that aren’t essential
  • Personal care such as manicures and cosmetics.

While you’re living on a strict budget, you should be able to pay considerably more toward your debts. Just remember, bare-bones budgets are only meant to be temporary. Once you’re out of debt — or a lot closer to your goal — you can start adding non-essential spending back into your monthly plan.

And while you are budgeting, that doesn’t mean you can’t have fun.  Spending time in nature is a great (and cheap) way to relieve the stress and anxiety you might be feeling from debt:

  • Do the Coogee to Bondi Walk in Sydney. This gorgeous hike goes for 6km and connects some of Sydney’s famous beaches.
  • Attempt the 1,000 Steps Kokoda Track Memorial Walk in the Dandenong Ranges National Park in Melbourne (but check it’s open first)
  • Lace up your sneakers and go on a pick-your-own adventure bush walk in and around Brisbane.
  • Get lost in Perth’s Kings Park and Botanic Garden, one of world’s largest and most beautiful inner-city parks.

Check out our blog post on How to Budget Like a Boss for more budgeting tips and tricks.


3. Stop using credit cards

Credit cards usually carry the biggest interest rates and that can make your balance balloon out of control. The first step is to stop using your credit cards altogether. Having a hard time letting go? Try literally freezing the cards in a cup of water in the freezer. By the time you are able to access them again, hopefully you will have changed your mind about spending.


4. Give priority to the interest-bearing debt

Think back to Step 1. You should have identified those debts that are incurring further fees and interest, such as credit cards and loans. Put them at the top of your list to tackle. Your low interest or interest free loans can wait, just ensure you pay them back before any interest-free periods end.


5. Pay more than the minimum payment

Paying off debt fast involves simple maths. The more you pay, the faster you’ll be free of your obligations. Don’t just stick with making the minimum payment every due date, or it will take you forever.

If you have a credit card balance of $10,000, pay a typical 16.35% interest rate, and make minimum monthly payments of $203, it will take you nearly 36 years to pay it off! And that’s only if you don’t add to the balance in the meantime, which can be a challenge on its own.

However, if you were to pay off more than the minimum amount, say $485 each month, it would take you only 2 years and save you $17,503 in interest. See the example below:


The same principle applies to any loan—a mortgage, a car loan or personal loan. Just take into consideration about fees you may be charged for early repayment.

Work out how long it will take for you to pay your debts and ultimately save money by paying back more than the minimum payment each month with this handy calculator from moneysmart.gov.au.


6. Ask for lower interest rates on your credit cards – negotiate other bills

If your credit card interest rates are so high it feels almost impossible to make headway on your balances, it’s worth calling your lender to negotiate. Believe it or not, asking for lower interest rates is actually quite commonplace. And if you have a solid history of paying your bills on time, there’s a good possibility of getting a lower interest rate. While you’re at it, other bills that you might be able negotiate down include:

  • Insurance
  • Internet or mobile phone
  • Mortgage
  • Rent

The worst that anyone can say is no. And the less you pay for these expenses, the more money you can throw at your other debts.


7. Increase your income

Cutting back is beneficial to reducing your debt, but if you can combine it with increasing your income, you’ll see your debt disappear even faster.

  • Can you ask for a raise at your current job? If you’re paid hourly, are you able to take on extra shifts to earn overtime? Offer to take on more responsibility for a pay increase.
  • Apply for a part-time job. Working both a full-time job and part-time job can be rough, but it is a good step toward paying off your debt. With Christmas coming up, local retailers are on the lookout for flexible, seasonal staff who can keep their stores operational during the busy, festive season. If you’re willing and able, you could pick up one of these part-time jobs and earn some extra cash to use toward your debts, knowing it’s only going to be temporary.
  • Did you use your time over the COVID lockdown to learn a new skill? Or maybe you already have a hobby that you could use to make extra money on the side. The key is taking any extra money you earn and using it to pay off debt right away.


8. Sell things you don’t need

Now’s a good time to “Marie Kondo” your home, by decluttering and clearing out everything you don’t need and selling it. Not only will you have spare cash to put towards your debt, but your organised uncluttered home is likely to contribute to lowered stress and anxiety levels and increased productivity!

If you get a sudden windfall — such as a tax refund or Christmas bonus — don’t spend it on a splurge. Instead, bite the bullet and use it to pay off debt.


9. Consider debt consolidation

Rolling multiple debts into one payment — ideally with a lower interest rate — through debt consolidation can make your debt easier to manage and less expensive overall. The less you have to pay in interest, the more money you can put toward reducing the underlying debt.


10. Know when it call it quits

7 Ways to Get Out of Debt FastSometimes debt can be too much. If you’re having a hard time keeping up with your debt payments and your total debt is greater than 50% of your annual income, it might be time to get help.

There are both informal and formal debt solution options available that may give you the relief you need to move past your debts. Otherwise, paying off what you owe could take years and get in the way of other financial goals, like saving for retirement or purchasing your own home. Find out more about your debt solution options here.

No matter what that plan is, any one of these strategies can help you get out of debt faster. And the faster you become debt-free, the quicker you can start living the life you truly want.

What are some of the ways you have successfully paid back debt quickly? Have you ever tried anything on this list?


Note: The information in this article is general in nature as it has been prepared without taking account of your objectives, financial situation or needs.


B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

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    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.