It can be easy to get into – but how do we get out of it?
A group of young people celebrating paying off debt

It’s can be quite easy to rack up consumer debt.

HECS, credit cards, personal loans, and it can seem all too difficult to get on top of.

Unfortunately – debt can also have a large impact on your borrowing capacity when it comes to applying for a mortgage. Therefore – if your borrowing capacity is on the tighter side it could be a good idea to reduce your existing debt.

Here’s some steps that can help you towards reducing your debt and buying your property.

Take a close look at how much money you’re spending

Create an excel spreadsheet to track your expenses for a three month period.  Aim to record each expense so you get a good idea of where you’re money is going. Some lender will allow you to log into internet banking and download your transaction history. From there – you can filter it to see if there are any common expenses that could be cut down.

Have a look at which expenses you could reduce

Now that you have a better idea of how much you’re spending each month, you can work out how you really need to spend on the more essential items, and where you reduce spending. Bringing your lunch to the office could save you a fair bit! Not opting for that second coffee of the day could save you up to $25 per week. Buying more generic brands can save you some dollars. Have a look at any ongoing subscriptions that could be better priced (negotiate with the provider) or could be cancelled.

Create a budget

The best way to get a handle on credit card debt is to stop using them. Create a budget detailing how much cash you need to spend on a weekly basis based on your number crunching from above. From there – you should be able to work out how much extra savings you could put away each week. Remember – it’s also good to have money put aside as a buffer for emergencies.

Prioritise which debt to pay off

Work out how much you owe on loans and credit cards. When you have a better understanding of the level of debt you have you can work out a realistic plan of getting rid of it. Aim to pay the minimum due on  credit cards so they don’t hit you with fees – don’t just stop at the minimum though. Those credit card interest rates can be high!


  • paying the higher interest rate cards and personal loans first to reduce the amount of interest you pay
  • getting rid of smaller debts at the beginning can provide you the sense that you’re making progress and paying off debt is a possibility

Devise a repayment plan

Now that you have your budget and you’ve worked out your what debts you’re up against it – you can plan on which debts to pay off first and when. Having a plan in place will provide you with a sense of control.

Celebrate when you reach your goals/milestones

The idea of getting rid off all your debt may seem overwhelming – therefore, breaking the process down into key milestones will help you see the road ahead. Don’t forget to celebrate when you hit a milestone – treat yourself to a lunch or an outing as a reward for your recent achievement.

Stick it out

Continue going with your plan – even if you hit roadblocks. If you happen to miss a credit card/loan payment because of an unexpected expense – try to remain focused and positive – you can get there!

Happy reading – and feel free to share with anyone who may find this info useful.



If you’d like to have Jamie provide advice on your finance structure, investment strategy, first home purchase, upgrade or refinance simply complete and return this FORM and he will be in touch – this is a FREE, no obligation service.


The information herein is not intended as investment, financial, legal, taxation, building, development or any other advice and must not be relied upon as such. You should obtain independent professional advice and make further independent enquiries before making financial, legal, taxation, building, development or investment decisions.


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