How to Clear Debt

I understand at times it is unavoidable and life can throw curveballs. However, a lot of debt is avoidable as it is impulse buys or things we want.

When I was younger, I had credit card debt purely because I shopped too much. More recent debt was due to custody and health issues. Both of which I was ok being in debt for, it was interest-free and cleared quickly.

So how do you clear debt easily?

Firstly, get real about how much debt you are in. Write it all out, the monthly fees, interest rates, all of it. Then create a plan to get rid of it. It won't be easy, but it will be worth it. Check these out:

​6 ways to easily reduce debt​

​How we cleared $90,000 worth of debt in 12 months: this couple started out unemployed so it was a huge achievement

​How I cleared $1,690 worth of debt in a week​

What I Would Do To Clear Debt Now​

If I had credit card debt, a personal loan or wanted to get ahead on my mortgage, there are a few things I'd do to pay down my debt faster.

1. Check I am on the best rate: Search for 0% transfer options with credit cards, compare interest rates for personal loans and my mortgage, depending on how long I've had them. When comparing, check the other features too such as redraw facility.
2. Do a full financial review: Go over all my expenses and see if there is anywhere I can cut back. In these times it is harder so check out how to do a financial review. Anything I save would be put on debt instantly.
3. Do a money hunt: Search my house and car for any cash, check my emails for forgotten giftcards, cash in my points with online surveys and reward programs etc. Learn how to do a money hunt here and 11 ways to find money.
4. Increase income: Sell anything I can. Read how to make money reselling. Then look at all other options to make money on the side such as 80+ side hustles. All extra income would be split between my emergency fund (so I can avoid future debt) and paying down my debt.

How to Deal with Debt Collectors

Dad used to be a debt collector years ago. Thanks to his advice, I've helped numerous people negotiate their debts, get better deals, have debts wiped etc. Here are his best tips, which are expanded on in 6 tips to clear debt fast and how to deal with debt:

1. Get your paperwork in order and all in one place
2. Answer their calls and work with them. However, if they call at an inconvenient time or when you don't have access to your paperwork request a call back at a certain time or offer to call them at a specific time. Make sure that call happens though!
3. Be realistic about your circumstances and negotiate with them. They simply want to know they are going to get their money. Make a goodwill payment on the day if you can then set up a payment plan if necessary to pay the rest. If you can only afford $20 a week though, be firm on that.
4. With negotiating, if you can manage a lump sum payment you can often knock a lot off the debt because some money is better than no money.
5. Be polite, calm and firm. They are just doing their job and are human. Getting angry helps no one.

How to Avoid Debt

Part of avoiding debt is mindset, part is living within your means and part earning more to clear debt quickly. Review how you are spending your money, if your basics for life are within your means and what you need to change. If you are constantly overspending and this going into to debt it means you either need to cut back your expenses, earn more or both.

Here are some tips:

​How to create and stick to a budget is essential to help you see where your money is going and get control

Also how to get rich being lazy with money gives tips to simplify your money.

How To Get Your $125 Bonus From ING

If you are a new customer of ING you can get $125 for opening an everyday account with them by doing the following steps:

1. ​Open an everyday account, put the promo code CNW116 in the promo box (you must use the code to get the $125 bonus), and complete all the steps below in the first month.
2. Deposit $1,000 into the account such as your income or Centrelink payments
3. Make 5 settled transactions
4. Open a Savings Maximiser (current interest rate is 5.5%)
5. Deposit any amount into the Savings Maximiser

Then you get your $125 the following month when the promotion is running. Promotion periods vary. The current promotion runs until 31 March 2026.

Fast Frugal Tip

Check if you are eligible for any freebies and discounts such as through sign-up bonuses and review your vouchers and freebies from the government here. ​

What I am Reading

Since this is all about debt, here are a few financial books aimed at managing your money and clearing debt:

​The Money Diary: End Your Money Worries NOW and Take Control of Your Financial Future by Jessica Irvine. She shares your money tracking system and tips to help you with your finances. She's Aussie too.

​Ditch the Debt and Get Rich by Effie Zahos. It includes your money mindset, tips to get out of debt and how to reach those milestones such as a new car, holiday or house.

​Money Games - Debt Freedom: The Fun Way to Get Out of Debt and Reach Your Money Goals by Heidi Ifland Nash and Debt Free Charts. And this one comes with a money back guarantee! "If Money Games doesn't help you achieve your financial goals, just let me know and I'll personally refund every penny you paid, no questions asked." ~ Heidi Nash​

The Thrifty Issue Community

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