Your relationship with debt should focus on how to beat it. Ease your money worries and get back on financial track with this step-by-step guide to tackling debt.

The temptation to spend more, give more and upgrade can feel overwhelming. Social media offers an endless stream of opportunities to shop, bombarding users with ads and playing into the very human desire of wanting “more” and “new”. With the emergence of buy now, pay later platforms, it’s hardly surprising most young Australians have given in to temptations and racked up some type of debt.

You don’t have to be a fast-fashion consumer to find yourself in this position. Your choices may be ethically conscious, thoughtful and practical, but still beyond your means. Regardless of whether the vibe behind your buys is well intentioned or not, the impact on your purse can be significant.

The emotional burden of debt cannot be ignored. Financial instability can take a real toll on a person’s emotional wellbeing, which can add to the cycle of spending and debt. Others may simply view debt as a way to “reverse save” for the things they value. The accompanying emotions can be as varied as the debt itself; the importance lies in acknowledging your own emotions around debt and cultivating compassionate self-awareness. Like all aspects of our financial lives, power comes from knowing and caring for ourselves.

There are many types of debt facilities, but you are likely familiar with buy now, pay later platforms like Afterpay, ZipPay and, of course, those that involve a credit card. These are often classified as “toxic” as they are easy to accumulate and likely to make you feel like your financial wellbeing is disappearing.

If you are disciplined and genuinely use your debt to manage your cash flow, always pay off the full amount (not just the minimum payment) and never incur any charges, then you can enjoy the perks, such as rewards, fraud protection, convenience and universal acceptance. But for many, the ability to keep on top of compounding credit becomes too difficult and the spiral of debt begins. If this is the case for you, your relationship with debt will be focused on how to defeat it and your journey to paying it off could be quite slow, depending on how much you have.

You may also have other debt facilities like a car loan, HECS-HELP, an investment property loan or even a mortgage on your home, so what’s the best place to start? 

Figure out what you owe

The first step to tackling your debt is knowing exactly what you owe and who you owe it to. Find out the minimum payments, interest rates and fees and due dates. HECS-HELP doesn’t have an interest rate, but it is increased by the inflation rate each year. This might feel daunting, but it’s important to work out the extent of your debts. You might find having a concrete number less daunting than feeling as though your debt is infinite.

Know where your money is going

Before you can figure out how much you can realistically put towards your debt, you need to know where your money is going and consciously choose where you are going to dial back your spending to channel this cash towards being debt-free.


Victory over your debt relies on careful prioritisation. You could rank your debt by interest rate/fees from highest to lowest, and make additional payments to pay off the most expensive debt first; this is often called the “avalanche method”. Or, if you want to gain some momentum and knock off the smaller debts first, use the “snowball effect”. Again, self-awareness is powerful here, so tune into your psychology and pick the method that will keep you motivated.

As there are no additional benefits to paying off of HECS-HELP early, the best course of action is to let it automatically come out of your pay. It makes more sense to pay off your credit cards first as they are likely to be the most expensive, then take out your car loan and mortgage. Investment loans fall into a “good” category because you will receive a tax deduction for the interest payments, so consider this when you prioritise your debt.

Pay off

If you have a few different debts, be sure to pay off the minimum on all of them to avoid the extra fees and then work on your prioritisation strategy. Reach out to your loan providers at least every 12 months and ask for better interest rates and be prepared to switch.

Build up your piggy bank

Support yourself to stay out of the red and stash some just-in-case cash. Aim to save between three to six months’ worth of expenses that you can draw on instead of using credit. Reinforce this with a spending plan.

It’s very easy to get swept up in the moment and respond to life’s temptations. Remember, you are not your debt, and with a little compassionate self-awareness and good planning, you can get back into the green.


Liz McLardy is a Financial Wellbeing Practitioner, specialising in financial education for women. For online consultations visit