Ahhhhh ‘debt’ - probably one of the worst words in the English dictionary… behind taxes and coriander. There ain’t nothing fun about debt - but let’s face it - we’ll all face some sort of debts in our lives. 

It might be HECS, credit cards or loans. The internet will fill your mind with get-rich-quick schemes.. Or get-out-of-debt-quick schemes - but the truth is, there are just a few simple tips you need to know to start tackling your debt. Pronto.

These tips ain’t rocket science (thank goodness) but they work prettyyy prettyyy prettyyy well…

1. Get clear on exactly what you owe

If you’ve got a few (or more than a few) different debts going on, it’s not hard to lose track of exactly how much you owe in total and when each different payment is due.

Getting up close and personal with your debt is an essential first step to getting on top of it, so you can start by making a list of everything you owe. And we mean everything. Think: credit cards, personal loans, mortgages, buy-now-pay-later and any other debts you might have.

2. Lay the debts out in an easy way to track

Get all those debts into a spreadsheet and make sure to include:

• the total debt amount, 
• repayment amounts 
• Frequency of repayment (weekly, fortnightly, monthly) 
• The interest rate for each debt.

3. Work out what you can afford to pay, and stick to it

Look at your debt spreadsheet and compare your outgoing payments to the amount of money you’ve got coming in. From there, you can figure out how much you can realistically afford to pay down your debts each pay cycle.

If you’re not sure what you can afford, you might wanna read our guide on how to write a monthly budget that slaps.

4. Consider the snowball and avalanche methods

If you’re not sure which debts to focus on paying off first, there are some tried and tested methods of how to prioritise your debts.

For the snowball method, prioritise your smallest debts first without taking interest rates into account. Once you’ve paid off the first debt, start directing your money towards the next smallest.

For the avalanche method, prioritise your debts from most to least urgent according to interest rates. This method makes the most sense mathematically, because knocking out higher interest debts will save you money in the long run!

5. Talk to your providers about financial hardship arrangements 

Most utility providers, phone companies and lenders have some sort of arrangements in place for people experiencing financial hardship. 

This usually takes the form of an adjusted payment plan to help you get back on track without getting cut off.

Ta-da. That’s it!

If you’re feeling stressed about being in debt, getting some professional advice is always a good idea. Fortunately, there are lots of free debt counselling services available in Oz. The National Debt Helpline on 1800 007 007 could be a good place to start.