Debt Hangover

Are you in a debt hangover because the bills have started to roll in? Just because your accounts have taken a hit doesn’t mean you can’t get on top of it.

It’s important you spend some time looking at your overall financial position and your personal priorities, before making any decisions on when and how much you can pay towards your debts.

Once you have a hold on that, you can start planning out which bills to pay first. It’s important to keep up with payments on all your bills but there are some that are more time-sensitive than others.

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Here at MoneyGirl, we’ve broken down debts into three broad categories:

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High priority debts

You should be paying close attention to these bills - they are for your essentials, and a non-payment could lead to serious consequences.

· Necessities (food, immediate medical expenses etc)

· Rent

· Child Support

· Other secured loans (you will know the debt is secured if you signed a security agreement when making the purchase or transaction)

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Medium to high priority debts

These debts are those bills on which you could potentially delay payment when in a tight spot.

· Mortgage repayments

· Utility bills

· Council rates

· Credit card debts (paying the minimum amount rather than the full balance if you must)

While delaying payment on these might help you out of a tricky spot, not paying these debts in a timely manner could have long term impacts on your financial health. Extensions to payment deadlines can be negotiated but they often come with extra fees, so be sure to keep an eye out.

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Lower priority debts

These debts may be paid once you’ve covered your other higher priority bills but be aware of any relevant terms and conditions when putting them on hold.

· Memberships

· Subscriptions

· Private loans (from friends or family)

· Centrelink loans

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What's best?

There is no right way to pay off debt because everyone’s financial situation is unique. Ultimately, finding a repayment method that works best for you and your financial circumstances will help you get rid of that debt hangover – even if it all comes at once. You can get in touch with your lender, creditor, financial institution or the relevant body to have a conversation about your options.

Australia has a lot of free debt help hotlines which provide financial counselling and professional help. They can assist you when you need additional support or help to negotiate with a utility company or bank.

Remember, you are in control and the sooner you take action to get on top of your debts the more options you’ll have.

It’s never too early to get on top of your debt!

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