There is little more stressful in life than money worries. When you have debt hanging over your head, it can take up all your attention so that nothing else seems to matter as much as that looming debt and the way in which just keeps growing.

But, sticking your head in the sand doesn’t help anyone. If you have debts, it’s better to deal with them than to ignore them. At, we provide a number of options that may help you get out of debt, allowing you to find the one that best suits your situation.

Take some time to find out what you can do to get out of debt today. It might be an easier process than you expected. Start your journey towards becoming debt-free right now, so you can pay off those debts, get rid of that stress, and start building up those savings.

What is debt?

When you owe someone money, that is a debt. If you have a store card or credit card with a balance owing on it, that is a debt. If you have a personal loan, car loan or student loan, that is a debt. If you have a home loan, that is a debt. There are many different types of debt, and you may have a number of them in your name, or none at all.

When you borrow money, whether on a credit card, personal loan or any other type debt, you become a debtor. As a debtor, you have an obligation to repay the amount owed to your creditor or lender. The repayment terms of the debt are typically set out in the terms of conditions of the loan, that you must agree to before that credit becomes available to you.

Borrowing money from a consumer credit provider usually involves interest. In loaning you money or providing you with credit, your credit provider charges interest for the service it is providing. As part of the terms of service, you may also have to pay fees to your credit provider, alongside the amount borrowed, and any interest that has accrued.

If you are unable to repay the amount owed to your credit provider, there may be serious repercussions. For loans secured against assets that remain unpaid, credit providers may choose to seize those assets to cover the amount owed. In some circumstances, the debt may be sold to a third party debt collection agency, which could mean dealing with debt collectors.

Good debt vs. bad debt

While the concept of debt is a simple one, there are, in fact, different types of debt. There is ‘good debt’ and there is ‘bad debt’. In most cases, having some form of debt is unavoidable. Buying a house outright would be impossible for most people, which is why home loans exist. Allowing you to build wealth, rather than reducing it, a home loan is considered a ‘good debt’.

Once you have paid off your home loan, you have your home as an asset. On the other hand, ‘bad debt’ is generally thought of as debt that leaves you poorer, rather than richer. ‘Bad debts’ such as credit card debts, leave you nothing but a feeling of accomplishment once they’re paid off. This is why it’s best to avoid ‘bad debts’, or pay them down as quickly as possible.

It’s also worth bearing in mind that being in debt doesn’t necessarily mean you are in trouble financially. While they are still ‘debts’, your home loan, car loan and credit cards will only become a problem if you are unable to repay them. However, if you have a number of debts in your name and they become unmanageable – or you feel you are paying too much in interest or fees – then it might be time to deal with that debt.

What should you do to deal with debt?

When it comes to money worries, it can be tempting to try to ignore them and hope they go away by themselves. They won’t. Unless you have a trust fund that’s due to mature, or a winning lottery ticket, your debts are yours to deal with. So, what can you do to deal with your debt?

Face the problem

While it may be unappealing, facing your debts is the only way to tackle them. You need to know the extent of your financial problems if you’re going to deal with them effectively. That means sitting down and making a list of all your debts, including the creditor, the total amount of the debt, the monthly payment amount, the interest rate and the due date. Once you have this information, you can prioritise your debts.

It’s important that you don’t just create this list and forget about it. Keep it handy, and refer to it periodically, especially after paying bills. Remember to update the list every few months, revising the amounts owed as your debt changes.

Make a budget

While creating a budget isn’t the most exciting thing you could be doing, it is essential. To work out how much you can afford to pay out as you pay back your debts, you need to know exactly how much is available. Tally up how much you have coming in, how much is going out, and calculate how much is left over. There are plenty of online tools and apps that can help with this.

This is a good time to assess your expenditures. Seeing your expenses in black and white may allow you to work out in which areas you could cut back. It’s worth remembering that cutting back too much is not recommended. A budget that is too tight will be difficult to stick to, which may lead you to splurge, spending more than you otherwise would on a more lenient budget.

Once you have created your budget, you should be able to see how much is available to go towards paying off your debts. This should allow you to create a repayment plan, so you know what money is going where, and when. Setting up automatic payments from your bank account can help you stick to this plan, but be sure to keep track of these extra repayments, so there is money available in your account.

Consider a balance transfer offer

If you have balances owing on high interest credit cards, you may find it difficult to pay down the balance while covering the interest as well. Opting for a balance transfer credit card could give you a break from interest, allowing you to pay down the balance faster. In the longer term, a low rate credit card could be worth looking in to. However, be sure to read the terms and conditions on the card before applying, and close the old card account to avoid the temptation to start spending.

Consider debt consolidation

Consolidating your debts means using a new loan to pay off all your existing debts. Debt consolidation can involve taking out a personal loan to roll all debts into that one new loan, or it can mean employing a debt consolidation service to deal with your debts for you. Knowing whether debt consolidation is right for you means considering your personal situation.

If you are having significant financial troubles, debt consolidation could give you one affordable loan repayment, helping to reduce the stress you are experiencing. If you are paying too much in interest or fees on your existing debts, debt consolidation could help you save money by rolling those debts into a lower interest loan.

As with any form of credit, there are pros and cons to debt consolidation. To find out more, check out our debt consolidation page.

Snowball your debts

An alternative option to debt consolidation involves ‘snowballing’ your debts. Instead of tackling all your debts at once, you could try the debt-busting technique known as ‘snowballing’. In doing this, you focus on one debt, and concentrate all your efforts on paying that debt off. Meanwhile, you make only the minimum repayments on everything else.

Once you’ve paid that first debt off, you start working on the next one, and then the next one. As you pay off each debt and close down each account, you can enjoy the feeling of success as you see your debts become fewer and fewer. To work out if this would be the right tactic for you, you may want to use a debt calculator to compare your options.

Talk to your lender

If you need help, you have to ask for it. By talking to your lender, you may be able to work out a repayment plan on your debts, while avoiding paying more on late payment fees. Talking to your lender may also help you find a loan product that better suits your needs, perhaps with fewer bells and whistles, but lower interest and fees.

Get help

Financial worries can be intense. It’s easy to let debt get on top of you to the extent that you feel there is no way out. If you have tried to deal with your debts but you are still in trouble financially, it’s important to get professional advice immediately. Independent organizations can offer free guidance.

Financial counselling may be offered by community organizations, community legal centres and some government agencies. You may also be able to access free legal advice if you are in debt and have legal problems, getting help from community legal centres and Legal Aid agencies. Lastly, if you are in urgent need of help and are in financial crisis, there are services that can help you.

Start saving

While it may seem impossible right now, saving is an essential part of avoiding debt in the future. Once you feel like you are on top of your debts, reassess your budget to work out what you can put aside in savings. By setting aside some of your income each month, you can create an emergency fund that you can call on when needed. Besides giving you peace of mind, having this fund available may mean you can avoid getting into trouble with debt in the future.

What should you do when debt collectors call?

Having debt collectors contact you can be intimidating. But, there are ways you can deal with debt collection agencies that may allow you to enjoy a better outcome. By following the steps set out in our guide to dealing with debt collectors, you will know what to do if a debt collector calls, how to appeal the debt if it’s not yours, and how to negotiate the best deal on your debt.