Tackling debt is a journey that takes time; sometimes a long time. These tips will help you on your way.
Set goals for yourself
Having a few goals in mind can motivate you to make changes. Tackling debt and regaining financial control might be one goal, but also try to build in something to look forward to. It doesn’t have to be anything big, but something motivational can spur you on to success!
Whatever your goals are, make them real. Write them down, put up a picture, make a promise to yourself or someone else. Do whatever it takes to act as a personal reminder and motivator to you to keep going. You might like to use the Competition and Consumer Protection Commission’s (CCPC) sample goal setting worksheet (pdf).
Set a time to tackle your debts
Promise yourself a set time in the day or week to tackle debt and take control of your finances. You can then try to take a break from thinking or worrying about it for the rest of the time, secure in the knowledge you are taking action.
Set up a storage system to keep track of your progress
Dealing with finances and lots of creditors can get very confusing. To manage all the documents and files, you need some sort of storage system to keep track of progress. You can use an electronic storage like Google Drive, a bundle of envelopes in a box, an accordion file or a ring binder. Pick what works best for you. If you haven’t already got a system, now is a good time to start one.
You will need at least the following sections:
- Income-related information
- General expenditure records
- Each type of bill, credit commitment or debt needs its own section. Here you can store all letters and documents relating to each one. (Make sure to date each item.)
- Your full financial picture. (This will become your money management plan later and any financial statements)
- Current account or savings account statements (you may use online banking for this)
Deal with any urgent matters first
Tackling debt can take a while. How long will depend on many things such as:
- Which method to solve your debts you choose
- How long it takes creditors to respond to you, and you to them
- Whether you have queries or complaints or need further advice along the way
So if you have anything urgent to deal with, such as responding to the court, or disconnection notice, deal with it now and let the creditor know you are using the MABS guides to tackle your debts.
Guidance on which debts to tackle first is available in Step 2 of our 5 step tackling debt plan.
You can learn about what are priority debts and secondary debts.
If you need some support, contact MABS for free, independent, professional and non-judgmental advice and support at any point on your tackling debt journey.
Work on a money management action plan
Drawing up a money management plan is really important and putting it into action even more so. Any offers you make will be more realistic and likely to last. See our section on money management.
Keep a spending diary
Try not to just guess figures for your money management plan. This is not in your best interest and will not work for you long term. Keeping a spending diary for a few weeks or even months will show all the small and irregular items which are so easy to forget. Use the Competition and Consumer Protection Commission’s (CCPC) free spending diary. You can also download one of the many spending tracker apps available online.
Stop using any unnecessary credit
Some credit, such as using electricity, is unavoidable. But if you can avoid adding to your debt, you’ll find it a start towards reducing debt. Cutting up credit cards can be a symbolic as well as a practical first step towards spending only what you can afford. But remember, you will still be charged the government stamp duty fee while the account remains open.
Keep track of all contacts with creditors
Always respond to creditor letters and keep a record. Keeping track of all contacts with creditors will act as a useful reminder. It will also avoid confusion if you are dealing with lots of different creditors, different departments, solicitors and collection agents at the same time. As staff change and debts get moved around, it is also important to have records in case there is any dispute on what has been agreed later.
Keep up and keep track of payments to creditors
Keep making any payments you can manage while working out or negotiating a tackling debt plan. Stopping payments is not advisable as interest and charges can build up quickly. Paying what you can afford, no matter how small, keeps the habit going and also shows good faith to the creditor.
Remember also to keep track of all payments you make. You can store receipts or keep a log for this or use online banking to keep track.