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How to manage debt


How to manage debt and get yours under control

Australians have a unique relationship with debt, claiming the world’s second highest household debt behind Switzerland. And the current landscape is encouraging Aussies to make some serious changes.

Debt doesn't skip generations and is clearly a problem facing a lot of Aussies. From home loans to HECS debts and credit cards to buy now pay later services, keeping up with the Joneses can take a toll on bank balances.

New research from the CPRC has found that 1 in 5 Aussies are 'very' concerned about their current financial well-being, with 22% turning to credit cards or buy-now-pay-later services to bail themselves out.

If we're already in so much debt, a little more can't hurt, right? Not necessarily - breaking down debt can go a long way to getting it under control.

Understanding ‘good debt’ and ‘bad debt’.

Accumulating debt is easy, but understanding ‘good’ and ‘bad’ debt can help you create a strategy to pay off both.

Debt is considered ‘good’ (stick with us!) when it carries a low-interest rate and/or invests in your future.

  • HECS debt is a 0% interest loan paid when you have the means to do so.
  • Business loans may help you take that side hustle into professional money-making territory.
  • A mortgage is generally low-interest and can replace rent repayments.

Most other debt is ‘bad’. Obviously.

  • Car loans are unappealing considering how much a vehicle’s value decreases the second it leaves the car yard (unless you need it for work or an essential purpose, in which case, claim it on tax!).
  • Personal loans and credit card debts are high-interest and should be cleared, stat!

How to pay off your debt

Wiping your debt and breaking the debt cycle is intimidating, but not impossible. Here’s how you might go about sustainably reducing your debt or, paying it off completely.

  1. Start by laying out your debts and setting a budget for how much of your income you can set towards paying them.
  2. You can order your debts in one of two ways: either from the debt with the highest interest rate to the lowest (‘the avalanche’), or from the lowest debt dollar amount to the highest (‘the snowball’). The goal with either is to remove each debt one-by-one, simplifying the process and cutting the overall interest you’re paying.
  3. Each month, make sure you’re paying the minimum payment on each debt by its due date, so you’re not charged with any additional interest or fees.
  4. Check your budget and, if there is any leftover cash, send it straight into your priority debt.
  5. Continue this process until your debts are paid.
  6. Chat to your bank. If you’re finding managing debt too stressful and overwhelming, your bank should be able to help you put arrangements in place.

Tools to help set up your debt-paying budget:

If you’re a UBank USave & USpend customer, you get automatic access to our in-app budgeting tool Free2Spend. Just add your income, expenses and financial goals, and it will show you how much money you can spend each day while still hitting your savings goals – in this case, wiping your overall debt balance.

Pro tip: You can also have up to 10
USave savings accounts, all individually nicknamed to match your savings goals, including smashing your debts.

Being in debt (whether ‘good’ or ‘bad’) isn’t a disaster

But once you’re debt free, keep going! Establishing good savings habits is essential to those other goals in life – a new car, house deposit, or that blowout holiday (once it’s safe to travel) are all within reach if you keep pushing ahead with your savings system.

With the right strategy, the right tools and a bit of financial willpower, the world can be one big debt-free oyster. You’ve got this.


For those struggling and seeking additional support and advice, websites like could be useful.

Before making a decision to acquire USpend or USave, you should obtain and consider the Terms and Conditions available at USpend and USave are issued by UBank, a division of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686.

The information contained in this article is of a general nature only. It doesn’t take account of any person’s objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate for your circumstances and seek independent legal, financial, and taxation advice.