So you’re in debt. No judgement, it happens. But the sooner you get out of debt, the less stress you’ll feel and the less interest you’ll pay overall.

We should clarify: there is bad debt (credit cards, personal loans, car financing) and there is good debt (mortgages, HECS), which, when used smartly, can improve your financial position. Yes, the sooner you pay off your mortgage the less interest you’ll pay and the more disposable income you’ll have in your pocket, but don’t stress too much about paying it all off right away. We’re going to talk about higher-interest debts, ones that affect your credit rating and cause personal stress.

Here’s how to tackle $10,000 of debt. It’s not easy, but it will be worth the effort.

First, calculate your total debt. That includes all credit cards, personal loans, car loans, debts to friends, AfterPay, whatever. We’ll leave your mortgage and HECS out for now. The number might scare you, but you need to know. Be aware that you’ll have to pay more than that in total depending on your interest rates – you’ll be able to get an idea of what that figure is with a calculator like this one.

You may want to break that number down into smaller, less scary numbers, such as dividing it by 12 to give yourself a monthly goal. For most people, $10,000 is surprisingly achievable in a year.

Then decide on your strategy. If you only have one loan or credit card, you don’t need to worry about this, but if you’re facing a few different debts, it will help.

There are two popular strategies for tackling debts: the debt snowball and the debt avalanche.

The debt snowball method, popularised by personal finance guru Dave Ramsey, has you list your debts from smallest balance to largest balance. You then focus on tackling the smallest balance while making minimum payments on everything else. When the smallest balance is paid off you move on to the next smallest while still meeting all other minimum payments.

The idea behind this strategy is that the wins of eliminating entire debts early will motivate you to continue paying off other debts.

The debt avalanche method sees you list all your debts from highest interest rate to lowest interest rate. You then focus on putting all of your extra money toward your highest interest rate while making minimum payments on the rest.

Mathematically speaking, this method saves you the most money while you pay off debts, but it will take you longer to start getting those wins.

There’s no right way to tackle your debts, so just decide which one will be easiest for you to stick to.

An alternative is a debt consolidation loan. This brings together all your debits – credit card, store card, personal loan etc. – in one place so you’ll make one payment rather than several. It also means no multiple annual fees, and one regular repayment, with one interest rate. However, this only makes sense if the interest rate plus fees is lower than the average interest rate and fees of your existing debts.

If you have credit card debt, consider a balance transfer card. This is when you move the amount you owe on one card to another card that offers a low or 0 per cent interest rate for a limited time, usually 12 to 24 months. This means you can be making the same payment amount but paying off more of the principal rather than interest.

The caveat is that after that limited time, the interest rate goes up – and it may be higher than what you were paying before so be careful you aren’t tempted to keep spending money on the new card.

Next, free up money in your budget so you can put as much as possible toward your debt. Every little counts, so comb through your bank statements and see where you can cut back. Be honest: how much are you spending on streaming services? Dining out and takeaways? Clothes and shoes? Beauty services? Travel? Gym memberships?

We’re not telling you to cut out all the fun in your life, but you’ll need to be realistic about what you can afford until your debt is gone. As an example, if working out at the gym also keeps you sane and acts as your social scene, that’s probably worth keeping. The takeaways you get on the way home? Maybe not so much.

If you’ve squeezed everything you can out of your budget, you might need to increase your income. If you think you’re in a position to ask for a raise or promotion at work, now is definitely the time to ask. See if you can take on extra hours or duties at work to earn extra, or consider taking on a second job for a few hours or days a week. Consider turning a hobby into a side hustle, or sell a few of your possessions on eBay or at a market stall.

Make tackling your debt your priority – after health and wellbeing, of course, but ahead of holidays, entertainment, socialising, shopping, hobbies etc. etc. etc. Being debt-free feels better than any ASOS or Uber Eats delivery ever will. Celebrate each milestone – you’re doing great.

Once your debt is cleared – and it will be! – make sure you don’t go back into debt. Be aware of your spending triggers and try to avoid them, and remove the temptation of buy now, pay later services and credit cards.

If you don’t think you can manage your debt by yourself, there are plenty of free services available to help you. And if you feel like it’s affecting your mental health, contact Lifeline for confidential support.

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