10 Tips to Effectively Manage Your Debts in 2024

If it feels like your loans and credit card payments are piling up in the new year, you’re not alone.
Last modified: 19th February 2024
William Jolly  |  

When you include mortgages, the average Aussie household debt grew 7.3% to more than $261,000 in 2022, according to figures from the Australian Bureau of Statistics (ABS). Excluding mortgages, the average Aussie household has a personal debt of $17,700!

Debt piling up is particularly a problem at the start of the new year. A Finder survey in January 2024 revealed more than one-third (38%) of Aussies, or 7.7 million people, had racked up Christmas debts. The majority of those said it would take between one and five months to pay all that debt off!

The same study one year prior showed 49% of Australians had racked up Christmas debts, with one in three (36%) predicting it would take at least five months to pay it all off.

"Many Australians experience significant financial stress over the holiday period," Finder's credit card expert Amy Bradney-George said.

"The pressure of gift giving and festive activities can often lead to overspending and an increased reliance on credit."

With the cost of living seemingly higher than ever and endless borrowing options at your fingertips, it can be easy to pile up debts without realising it. Thankfully, there are some practical tips you can implement that can make your debts easier to manage and relieve some of the financial stress caused by outstanding credit.

In this article, we'll go through our top 10 tips to effectively manage your debts and help you get on top of your finances.


Table of contents:

  1. Do a debt stocktake
  2. Create a realistic budget
  3. Work out what you can afford to pay
  4. Prioritise your repayments
  5. Don’t open new accounts
  6. Consider a debt consolidation loan
  7. Make future repayments on time
  8. Make extra repayments if you can
  9. Boost your savings
  10. Get help if you need it

1. Do a debt stocktake

The first thing you could do when trying to get on top of your debts is to do a stocktake of all current debts. This means making a summary of all loans, credit cards, buy now, pay later (BNPL) services and even HECS/HELP debts you have, what you owe on each and how much it all costs together. 

Consider also listing the interest rates and fees you're paying for each one: if you don't know what you’re paying for each, this is your opportunity to find out. If you have multiple debts, you'll likely be paying different interest rates and fees which can affect how much you end up repaying in the long term. 

By doing a debt overhaul, you can visually see exactly how much you owe and understand what your options are in terms of managing these debts.

Avoid these debts

Don’t forget to list out any wage advances or short-term (payday) loans if you have any. These debts, in particular, can have extremely high fees and charges: so much so that MoneySmart.gov.au, the Australian Government’s initiative to help everyday Aussies take control of their finances, strongly advises against using them. 

These services can also have a negative impact on your chances of successfully applying for loans in the future.

2. Create a realistic budget

Now that you've listed out all your debts, the next step is to create a realistic budget. Being realistic means being fully honest with your finances: compare how much you earn, how much you owe and how much you are currently spending on other expenses. Create a budget based on this information to see whether there are any non-essential expenses you can forfeit to pool some extra money into your debt repayments.

Include these factors in your budget:

  • Your current total income (from employment, investments, rental income etc.)
  • Your essential expenses: groceries, living expenses and bills
  • Your additional expenses: this can include your Netflix subscription, gym memberships etc.

When you're able to visualise your current income and expenses, you can identify exactly how much you're able to put towards your debt repayments. Identify any expenses you may be able to live without and what you are willing to sacrifice to better manage your debt.

Hot tip: You don't have to do this manually. Your banking app should let you download your bank activity into a spreadsheet; you can also use third-party apps that track and categorise your spending, or you can use ready-made budget planners like Money.com.au's.

3. Work out what you can afford to pay

Now that you've assessed your bank account's ins and outs and separated the wants from the needs (and the non-negotiables), it's time to start taking action. The amount you have left over after working out your spending cuts is your 'debt money' - this is what you have left over to put towards repayments.

Be realistic with what you can afford to set aside for your debt repayments and pay off as much of you can within reason. There's no point paying too much towards your debts and ending up with even more!

4. Prioritise your repayments

Consider listing your debts in order of priority. That means choosing which ones you should pay off first in order of importance and cost. 

According to the National Debt Helpline, some debts are a higher priority than others because the consequences of not paying them are more serious. This includes things like:

  • rent or mortgage payments
  • council rates or body corporate fees
  • car payments (if owning your own car is essential)
  • energy and water

So it's generally a good idea to make sure your high-priority debts are covered first. You can then look to prioritise paying off your remaining debts in any of the following ways:

  • The 'snowball' method, where you pay off the cheapest or easiest to repay debts first to build momentum and savings early (BNPL could be a good example of a smaller debt to pay off first)
  • The 'avalanche' method, where you prioritise your most expensive debts first to get them out of the way and avoid high-interest charges and fees. For example, you might want to pay off an expensive credit card bill first.

5. Don't open new accounts

This might seem like an obvious tip, but it can be tempting to take out more credit to deal with your current debt, especially if there's fancy marketing or a seemingly attractive signup offer to go with it. 

Unless it's a suitable debt consolidation loan or a balance transfer offer that suits your needs (see below), try to avoid opening up new loans or credit accounts when you already have a sizeable amount of debt. Pay off what you have first and close/cancel any unnecessary accounts you no longer need.

Did you know: Approximately 68% of Australians say they have at least one credit card, and around 20% have at least two.

6. Consider a debt consolidation loan

Having multiple different loans means multiple interest rates, multiple sets of fees and multiple places to make repayments on different dates. It can also increase the chances of missing a repayment or two.

If you have multiple debts that you're finding difficult to manage separately, you may choose to consolidate your debts with a consolidation loan. A debt consolidation loan is used to streamline all of your different repayments into one repayment plan. This can save you money on interest and monthly fees, as you'll likely be paying different amounts on all of your loans.

Before deciding on a consolidation loan, you should compare whether you'll end up saving money after factoring in interest rates, fees or any other additional changes. If it doesn't end up being cheaper, a consolidation loan may not be the best option for you. 

Hot tip: If you have high credit card debts, you can consider using a balance transfer, which is essentially where you move your credit card debt onto a new card (often with a lower interest rate) for a period of time.

7. Make your repayments on time

Managing your debts is often synonymous with time management. Making your repayments on or before their due dates can prevent late fees and/or defaults on your loans. Most lenders allow you to set up a direct debit from your bank account either weekly, fortnightly or monthly to avoid needing to manually transfer funds on specific days. This way, all you need to do is ensure there is enough money in your account on your debiting days. 

In addition to incurring extra fees, missing/making late repayments could also affect your credit score. If your credit score is low, you could have a harder time accessing credit in the future.

8. Pay extra if you can

In addition to making your repayments on time, you can pay off your debts faster and save money on interest in the process if you pay above the minimum required amount.

For example, let's say you owe $5,000 on a credit card with an 18% p.a. interest rate. If you only made the minimum payment every month ($108), that debt would take over 33 years to pay off in full, at a total cost of $17,181! But if you increase your monthly repayments to $300, you'd only owe $5,698 in total, and it would take just 19 months to pay off.

Even if you increase your monthly repayments on some of your loans and continue paying the minimum on the remaining ones, this can still end up saving you money in the long term. Some lenders (like Jacaranda Finance) will let you make extra repayments at no additional cost, so explore this option if it is suitable for you.

9. Boost your savings

If you're starting to get your debt under control, it's crucial you don't fall back into the same trap later on. Start boosting your savings regularly so you have some cash to fall back on when expenses arise.

Open a new savings account

High interest rates are your friend when it comes to savings accounts. If you haven't reviewed your savings account in a while, chances are you're missing out on potential interest. Gone are the days of being stuck with a savings account below 1% p.a - thanks to the handful of cash rate rises in 2022 and 2023, you can now get a savings account rate of 5% p.a or higher (as of January 2024).

With savings rates climbing, Treasurer Jim Chalmers has encouraged Australians to shop around for a better deal, with many customers still stuck with sub-par rates. 

“Banks should treat their customers fairly when it comes to savings accounts,” Dr Chalmers told the Australian Financial Review.

“If your bank isn't giving you a fair deal, I'd encourage you to look around for a better offer. With the Consumer Data Right [which allows customers to compare different offers in a more streamlined way] rolled out across the banking sector, it's easier than ever to find the best deal for you.”

Start an emergency fund

While it may seem counterintuitive to create an emergency savings fund while trying to pay off your debt, an emergency fund might prevent you from incurring further debts in the future. Having a 'safety net' that you can use when an emergency arises can defeat the need for a credit card, personal loan or other credit solution, which can help you better manage your current debts without creating even more.

Ideally, 6-12 months of living expenses is a great foundation for an emergency fund; however, even just having $1,000 sitting aside can be helpful in an emergency.

Did you know: SEEK data shows it takes 75% of Australians out of work at least 6 months to find a new job, which is why you should aim to have this much worth of emergency expenses in your savings account.

10. Get help if you need it

If you're really struggling with money, don't turn to expensive short-term options like payday loans to get by. Instead, consider reaching out to the number of organisations that are set up to provide people with financial assistance when they need it.

You can ask your bank or lender for financial hardship assistance, which may involve them setting up a payment plan for you or pausing your repayments. You can also call the free National Debt Helpline on 1800 007 007. ASIC's MoneySmart provides a comprehensive list of resources you can get in touch with, so check it out if you need help with money.

Find the right lender for you

One final way to avoid getting into too much debt is to find a lender or credit provider that suits your needs. Interest rates, fees or a lack of transparency and flexibility in repayments are all factors to consider when choosing a lender, so shop around and compare lenders based on your preferences. 

At Jacaranda Finance, we offer fixed-rate loans from $2,100 all the way up to $25,000, with loans of $25,000 available for those buying a car. Our repayments are flexible and can be managed entirely online: we also allow you to make extra repayments and pay your loan out early at no extra cost! 

Check out our range of fast online loans today and see if we're right for you.

Written by - William Jolly

Content Manager
William is the Content Manager at Jacaranda Finance. He has worked as both a journalist and a media advisor at some of Australia's biggest financial comparison sites such as Canstar, Compare the Market and Savings.com.au, and is passionate about helping Australians find the right money solution for them.

You can get in touch with William via williamj@jacarandafinance.com.au.
Related Topics