How to Manage Debt and Get it Under Control 

Research recently released by the Australian Securities and Investment Commission (ASIC) indicates that 47% of Australian adults with debt have struggled to make repayments in the last year. Whilst debt can ultimately lead to increased wealth over time, it can also become a financial and emotional burden. 

Learning how to get debt under control is much easier with experts on your side. ActOn Wealth financial advisers work closely with clients to better manage, leverage, and reduce their debt. If you’re overwhelmed or confused by your repayment obligations, our specialists can help you find ways out. We can introduce new pathways and behaviours to prevent similar future situations. 

Here, we share some of the best ways to manage debt. 

How Much Are You in Debt? 

Dealing with debt begins by recognising that you are in debt and then by understanding the extent of what you owe. Start by creating a thorough list that captures:

• All creditors – mortgages, credit cards, friends, family members, etc 
• Balances 
• Interest rates 
• Minimum repayments and their frequency 

If you’re unsure you have all the paperwork, ask for a free credit report from Equifax, Experian or Illion. If you make the request directly, you are entitled to an annual free report without affecting your credit rating. 

Find out if these repayments incur additional annual fees or late payment penalties, and add this information to your list. 

Combine the monthly total of these repayments and offset that figure against your post-tax salary. Obviously, you will ultimately have to factor in more outgoings and possible incomings, but this now gives you two very clear figures with which to work. 

Explore Debt Relief Options 

Credit repair agencies in Australia specialise in negotiating debt repayment and even reduction on behalf of clients. Before appointing such an agency, you should check their credentials,  ensure they are listed with ASIC, and clearly understand their payment terms, fees, and any impact their involvement might have on your credit score. 

Free Debt Legal Advice

If you’re now receiving debt collection notifications and threats and can’t afford legal advice, you can approach free community legal centres for guidance and assistance.

Consider Debt Consolidation

The first step outlined above will give you a good understanding of how complicated or otherwise your debt repayments might be. If you have considerable debt spread across multiple creditors with varying interest rates and terms, you might consider consolidating it. This involves taking out another loan and using it to deal with all these disparate debt payments. You then only have to deal with a lump sum single debt. 

This option can make it easier to manage your debt. It also indicates when you might become debt-free and provides greater control over your budget and cashflow management. As part of our financial planning services, ActOn Wealth is highly experienced in finding the right loan provider and terms for such situations, and we’d be happy to talk to you about this in more detail.

Create a Debt Management Plan 

Whether you’re paying off a consolidated debt or a myriad of different loans, you need a plan. This is another area where our financial advisors in Melbourne can make a big difference. We can go through your cash flow, budgeting and debt management to help you determine: 

• How to calculate your discretionary income to manage debt repayments and other obligations.
• How to save more money. 
• How to prioritise repayments. 
• What expenses are mandatory, and what can be sacrificed. 
• Areas for potential savings. 
• Lower-cost alternatives to everyday expenses (such as energy bills and subscriptions). 
• Lower-cost alternatives to more significant household expenses (such as risk protection insurance). 

We can run financial models that provide different outcome scenarios so you can see the real-life effects these changes have over time. Our team is also very committed to empowering clients with the knowledge and tools to improve their financial literacy and help them make good decisions moving forward.

Contact ActOn Wealth About How to Deal with Debt 

Don’t go into a debt battle alone, and don’t assume financial advice is beyond your means. Spending money wisely can give you the best possible plan to reduce your debt sustainably. The peace of mind it can provide is invaluable. Besides, we have payment structures that consider your situation and provide the most reasonable, affordable options. 

We’re here to help you get out of debt. And, as impossible as it might seem right at this point, we’ll take things even further and show how we can grow your wealth. With the right strategy and best advisors on the job, it can be done. 

FAQs About How to Manage Debt

How Can I Find All My Debt?

If you are unsure who you owe and how much, you can request one free annual credit report from credit reporting bodies such as Equifax, Experian or Illion.

What is Debt Consolidation?

Debt consolidation is when you take out a single loan to pay off all your other myriad debts. You then have a single lump sum to pay back. This can be easier to manage practically, financially and emotionally.

Which Debts Should I Prioritise Paying First?

Not all debts are equal, so you should prioritise paying debts based on needs. Rent and mortgage repayments are typically the number one priority, so you continue to have a roof over your head. Council rates, body corporate fees and energy bills are usually next on the list. If a car is crucial to your employment, it also needs to be fairly high on the list. In the early stages, don’t pay any more than the minimum, especially if your debt is spread across lenders.

Is Refinancing My Mortgage to Pay Off Other Debts a Good Strategy?

Using your home loan as a debt consolidation strategy could be beneficial. ActOn Wealth financial advisors are also fully qualified mortgage brokers. This places us in an excellent position to assess your mortgage refinancing and the loans available to you. We don’t just consider the short-term. A mortgage is a long-term commitment, and we will examine what is best for you today and tomorrow. Speak to us about expert lending advice.