I’m 24 years old and work as an advisor for the state department. I make $85,000 per annum plus super. I’ve never owned a credit card because I’ve heard horror stories about overspending and racking up debt. But I started using Buy Now Pay Later four years ago - the fortnightly repayments worked well with my pay schedule. Before I knew it, I had splurged a lot more than I realised now I have $3,500 in debt. That’s $875 fortnightly payments - which I can’t even afford. How do I get myself out of this mess now?

• Keely

Hey there Keely,

It must be really stressful to have that debt weighing on you. 

That’s the allure of BNPL; it’s like your generous friend that buys you dinner, flowers, tickets to see The Weeknd - no questions asked…until a few weeks later, when they hit you up, reminding you it’s time to pay them back.

And then suddenly what you thought would be a $50 fortnightly repayment turns into…well in your case $875.

Firstly Keely, hats off to you for recognising that you’re perhaps not on the best of terms with BNPL and for reaching out to actively work towards a solution.

That’s half the battle.

The good (and sad) news is that you’re actually not the only one facing this problem.

CHOICE did a survey in 2022 which found that 76% of BNPL users struggle to make repayments, or have had to cut back on essentials, or took out an extra loan to meet their repayment demands.

Now, let's talk about how you can tackle this debt and ditch it like an old Spotify playlist that you’ve outgrown.

1. Start by talking to your provider

This is probably the last thing you feel like doing right now, but it’s the most important.

Your BNPL provider will have a process in place for customers that are struggling to repay their owning amount.

There are a few different options you should be able to discuss with them including:

• Deferring your instalments
• A payment plan
• Waive late fees
• Agree not to ding your credit score if you keep to an agreed repayment plan

This first step is your opportunity to reduce the burden of this debt as much as possible. 

Keely, you’ll need to channel your inner Harvey Specter, or better yet, Jessica Pearson to negotiate repayment terms that work best for you.

Make sure to get confirmation of the terms you agree in writing from your BNPL provider so there’s agreement on both sides.

2. Reduce your credit limit, or better yet close your BNPL account

If you continue using BNPL, you don’t want to be in this situation again. 

You can make it easy for yourself to use BNPL safely by sticking to just one account (the more accounts, the harder it is to keep track of your debt), and lowering your credit limit to a level that’s within your means and reasonable.

Though, it’s worth mentioning that BNPL companies make a bulk of their profits through customer late fees. 

In 2018, Afterpay’s late fees made up 24% of its income - that’s money that we don’t need to be paying.

So truthfully the best way to guarantee that BNPL doesn’t land you in hot water again is to stop using it all together.

3.  Create a plan for your repayments

Once you’ve agreed on repayment terms with your BNPL provider, you need to put an action plan together to reduce your debt.

Put calendar reminders in place for when your repayments are due so they don’t catch you by surprise.

You could also consider changing your payment date to be the same as the date you get paid. 

That way you know you’re prioritising paying down debt immediately before using that cash on other expenses.

4. Update your budget

Keely, it seems that your biggest money priority right now is to clear this pesky debt. 

To give yourself the best chance, spend some time updating your budget to account for the repayments you’ll be making.

This is also a good time to review any discretionary spending you might be able to cut back on while you focus on your BNPL debt.

Got any streaming services you haven’t touched in a while?

Or any social plans coming up that you could do in a low-cost or no-cost way?

If you’re unsure where you’re spending your money, you should check out the Flux budgeting tool - it can track your spending and all subscriptions in under 30 seconds.

The tips above should help you get on top of, and feel on top of your finances again. 

Seeing how proactive you’ve been in tackling your BNPL debt, you’ll be back on your feet in no time Keely. 

All the best!

‍

If you are struggling and feeling overwhelmed with debt, the National Debt Helpline is available for you, where you can speak to a financial counsellor who can offer free, confidential, and independent advice and assistance to support you.

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