How to improve your debt situation

Review your budget

A great place to start is reviewing your budget and setting realistic goals and expectations for your finances. Ensure all expenses are included in the budget, including loan repayments. Review your general spending and look for areas of improvement. For example, if you are buying ready-made meals or takeaway can you substitute this for cheaper, home-made alternatives? It may not seem like much when you look at it individually, but each area of saving can add up to be a decent amount.

Once you’ve pinpointed spending you can realistically cut back on, you can then set a budget to guide your living costs and fixed expenses. This will help determine how much you have left over to make extra repayments towards paying off your debt. 

Understand that not all debt is bad debt

It’s important to understand that debt can be used as a positive tool in growing your wealth. Taking advantage of interest-free periods on credit cards and getting the best rate possible for loans can be incorporated positively into a financial strategy. A financial planner can help with incorporating your debts into a strategy to help make the most of your financial situation into the future.

Prioritise which debts to pay down first

Prioritising the payment of debts higher in interest makes sense. It might also pay to look into whether consolidating high interest debts into one debt will help you save money and pay off the debt sooner. Bridges Financial Planner, Kim Hope, says that by simplifying your situation you may feel a greater sense of control over your finances.

Make use of interest free periods on cards

It is possible to use a credit card as an interest free loan. It’s important to understand the ‘loan terms’ of the card to ensure you are in fact better off. Understand when you have to pay the money back and what will happen if you don’t. You can generally avoid paying interest by paying off the amount owing in full each month. Check out our previous post on the reasons why people use a credit card.

Keep an eye on interest rates

Keeping an eye on interest rates, understanding interest rates and switching your loans to take advantage of good rates could all work towards saving you money. It’s important to remember to look at all the information when shopping around for interest rates. For example, you may find a rate with a 0% interest offer period, but the rate at which you pay after that period may be substantially more than another offer – costing you more in the long run. Interest rates and offers can be confusing, so talk to somebody who can help you understand what is being offered. If you are still unsure seek further clarification and help.

Seek help from your lenders

Do not hold back from talking to your lenders if you are finding it difficult to make repayments due to change in income or emergency spending. By talking to your lender you may find ways to help consolidate debt and reduce the amount of interest you are paying. 


Bridges Financial Services Pty Limited (Bridges). ABN 60 003 474 977. ASX participant. AFSL No 240837. This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner. In referring members to Bridges, Heritage does not accept liability or responsibility of any act or omission or advice provided by Bridges or its authorised representatives. Part of the IOOF group.

* Home loan comparison rate based on a $150,000 loan over 25 years.  Fixed loan comparison rate applies only for loans with an LVR of 80% or less and a loan amount of $150,000 to $249,999.  WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Interest rates are on a per annum basis. Rates are correct as stated and subject to change without notice. Rates shown are for new loans and do not apply to switches or internal refinances.

Home Advantage Variable rates include discounts shown from the Standard Variable rate. Home Advantage Living Equity rates include discounts from the Living Equity rate. Discounts are based on total lending in the package. Discount Variable LVR rates are for new lending and include discounts from the Discount Variable Loan Rate.  Discounts are not available in conjunction with any other interest rate discount or special offer. All fixed rates are fixed for the period stated and revert to the variable rate applying at expiration of the fixed term. To approved applicants only. Conditions, criteria and fees apply.

Loan to Value Ratio (LVR) is the loan amount divided by the value of your security property (determined by Heritage Bank at assessment), multiplied by 100. Owner Occupied loans have a maximum LVR of 95%, Investment loans have a maximum LVR of 80% and Living Equity has a maximum LVR of 80%. Heritage is not accepting any new investment applications until further notice.

This advice has been prepared without taking into account your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness having regard to your objectives, financial situation or needs.

Generate a personalised Key Fact Sheet based on your loan amount, term and repayments. This tool is provided to help you compare home loans from Heritage with other financial institutions.

The information provided is intended as general information only. Blogs have been prepared without taking into account your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness having regard to your objectives, financial situation or needs. You should consider obtaining personal investment, taxation and/or legal advice before making any decision.  Please consider the Guide to Heritage Deposit Products and Guide to Heritage Credit Card Products (available in-branch, or at www.heritage.com.au) before you decide whether a product is right for you. All loans and credit cards are subject to application and approval. Conditions, criteria and fees apply and are subject to change without notice.