22 November, 2023

5 tips to overcome debt

Most of us live with a bit of debt, and that’s usually fine. But if debt reaches a level where we can’t afford to repay it, that’s when it becomes a problem.

According to the Australian Bureau of Statistics1, average household debt at the end of the 2021-22 financial year was $261,492. That’s an increase of 7.3 per cent on the previous year.

The good news is that most of this debt could be considered ‘good’ debt. For example, a mortgage is considered ‘good’ debt because it’s an asset that can increase your wealth.

The bad news is that in April 20232, the average Australian had $20,238 in personal debt, which doesn’t fall into the good debt category.

On average, this is made up of $1,948 in credit card debt, $6,920 in personal loan debt and $11,370 in car loan debt2. This is up 11 per cent from the previous year.

Considering the rising cost of living, it’s not surprising that people are increasingly reaching for their credit cards to pay the bills.

What can I do?

If you’re feeling swamped by debt, you’re not alone. Research from Finder2 has shown that 6.1 million or 30 per cent of Australians are ‘extremely’ stressed about their current financial situation, an increase of 8% from the previous year.

Thankfully, there are some simple steps you can take to help you get back on top of things.

The National Debt Helpline, a not-for-profit service that helps people tackle their debt problems, suggests the following plan of attack:

1. Make your highest payments to the highest priority debts. High-priority debts are:   
  • rent or mortgage payments 
  • council rates or body corporate fees 
  • car payments for a car that’s essential for work, getting essential goods or medical appointments
  • energy and water
2. Consider requesting financial hardship

If you have debts in addition to the ones listed above, considering picking a few creditors to request financial arrangements from:

  • internet and phone bills
  • credit cards
  • product rental leases
  • payday (short-term) loans
3. Address debts with legal consequences

Some debts can become a higher priority if they have legal implications, such as:

  • legal action has been started against you
  • the creditor has a court judgment and is trying to enforce the debt
  • a bankruptcy notice or creditor’s petition has been served on you

These types of debts can’t be ignored, so get advice quickly.

4. General considerations

There are many other things to consider that will determine how best to tackle your debts, including:

  • your age
  • actual or possible changes to your working hours or income
  • how long your income will be reduced
  • the value of the assets you could lose if the debt isn’t paid
  • your creditors and the rights you have to seek hardship variations
  • whether the debt is secured over an asset
  • the amount of the debt and the interest rate that applies
  • whether a creditor is taking legal action against you and what stage the legal action is at
5. Ask for help 

If you’re struggling to keep afloat, it’s important to know you’re not alone and that help is at hand. In fact, the sooner you seek help, the better. 

The National Debt Helpline can provide free, independent, confidential advice from professional financial counsellors. The service is available on  1800 007 007  from 9.30am to 4.30pm, Monday to Friday. They also offer live chat from 9am to 4pm, Monday to Friday.

If you’d prefer to self-serve, the National Debt Helpline offers step-by-step guides explaining how to fix common debt problems. This includes what you can do if you can’t afford to pay your power, internet or phone bills, mortgage, credit cards or payday loans.  They also offer advice for more complex situations that contribute to financial difficulties, such as family violence, natural disasters, mental distress and facing or being in prison. 


We're giving you this information in good faith. It comes from sources we think are reliable and helpful. However, we can't guarantee its accuracy and accept no liability for content provided by external websites.