Well known author on finances, Dave Ramsey, said that becoming debt free is “20% knowledge and 80% action.” Meaning there are no magic tricks and no elaborate calculators or quick fixes. At Debt Cutter, we are in the business of helping you find immediate debt relief with the 20% knowledge that you need, but here we want to delve deeper and discuss the 80% action. Finding your way out of debt is all about making a big personal change. Just like a healthy lifestyle change or quitting smoking, the path isn’t easy but the change you experience will reward you many times over.

Debt bridge

We are here to be the bridge, the link and support you need to get to your goal of Debt Freedom.

What does it mean to take action in the simplest possible terms?
Money comes in, money goes out. You act to make the money and you act by deciding where every cent is spent.
STEP 1: Get financially real with yourself and set your intentions
The only way you are going to get out of debt is to get real. You may have been financially hopeless and now facing trouble or you may be a victim of circumstance like losing your job or partner or facing illness with mounting expenses. One thing we can all agree on, the cat is out of the bag and it’s going to be hard to get it back in. We all relate to the feeling of our finances being out of control. That sick feeling that overshadows every part of our lives.

It’s something we want to push down, avoid, run away from, have some magic solution drop into our lap and make it all better. When reality hits we need to rally the courage to take control of our financial situation and own up to the fact that a workable, manageable solution needs to be found. Set your intention to seek a solution, whatever that looks like, then take action. Good news everyone, it’s not as hard as it first appears. Even though you make the assertion that you alone can fix your debt problems, you are not alone in finding solutions.You are not the first person to take the journey and you won’t be the last. But you can be one of the growing number of people who have made it to the financially free other side. And being here means you are looking for solutions and have already taken the first step.

STEP 2: Lay your financials out bare
debt stress

Laying out your financial documents in front of you for a cold hard assessment is what you need to make your debt and full financial situation known. Not knowing where you are creates added, unnecessary stress to your subconscious.  It keeps the financial threat high on your subconscious’s threat list. It sounds neolithic, after all we aren’t being chased by dinosaurs anymore. However our basic body responses to threats remain part of our genetic make up. When it comes to finances ignorance isn’t bliss. This is what makes debt stress chronic, when you avoid resolution with your conscious mind the subconscious mind steps in to try and solve the problem. We recommend reading an earlier blog we published on stress, featuring Dr. Kelly McGonigal, who specialises in stress management.

Deciding you’d rather not know is not an option if you want to avoid financial stress. Gather your documents, take that cold hard look and, if you don’t understand the details then talk to someone who can work through the documents with you.

Ask these questions to get you started:

What are my assets?

How much do I owe (your debts)?

List each debt, who it is owed to, find out the per annum (p.a) interest rate, make sure you know what the mimimum monthly payment is. If you are unsure of all your debts, then you may need to get a copy of your credit file.

Do you know what are secured debts and unsecured debts?

Do you know where your money is going from week to week?

You don’t have to get elaborate here, even roughing it out can give you a sense of where adjustments can be made. Try our 3 Simple Steps to putting together your budget.

Are your expenses higher than your income In fact, are those debt repayments just overshadowing everything.  Yes, that is why you are here right?

STEP 3 - Get explicit with your financial goals

Knowing where you are going and why you are bothering is fundamental . If you don’t know what financial freedom looks like, then you will most likely just continue down a haphazard path. Take a moment to ask yourself a few questions.  What does it feel like when you imagine yourself living without financial stress? What would be different in your life if you were experiencing financial freedom? What choices would be available to you if you were in a positive financial position?

You might dismiss this as a waste of time but all these questions are important in working out what your goals are financially. Why do we need goals you might ask? To keep us motivated, to have something to strive for. To give us a direction and a sense of accomplishment when we’ve achieved them. Who doesn’t want to feel good when it comes to money. Especially if you’ve felt negative for an extended period of time because of out of control debts. That sense of financial achievement might be so lost or foreign to you over the years of hardship that you might be thinking that you will never feel it again.  Work out your goals and start on them today. We all deserve to achieve our goals and live a life of free of financial stress.

STEP 4 - Create a Get out of debt plan

Creating a plan to get yourself out of debt is an essential step towards feeling in control. It might not even be an ideal plan, at first, it might perhaps be years past the time you’d like to have paid it off by.  Setting up a plan relieves the survival pressure your subconscious feels and expresses as stress. At this stage, you might not even be able to see the end of the road but you will at least have a plan to be walking along it and not just sitting there doing nothing significant. Or worse! Getting deeper in debt because of no plans and out of control lifestyle choices.

The very first plan you put in place is to figure out what you need to do to ensure you keep up your minimum payments and pay back what you can on any defaults you already have. Talk to your partner if you have one, or perhaps a free financial advisor (they are out there). Get very clear with yourself about what it is you need to do to move forward and manage the minimum. Commit yourself to that minimum and reduce your feelings of stress and debt spiralling.  Once this is in place you can then start exploring your options to really tackle your debt head on.

If you are struggling to keep up with the minimum payments on your debts or are already behind and finding it difficult to catch up, then it is important to seek help as soon as you can. Are your current financial difficulties short or long term? We ask because there are different approaches to tackling debts depending on what your current financial difficulties are. Your options for paying down your debts will be affected by many situations. Losing your job or managing loss of income due to injury or illness may mean you only need to seek short term fixes until you find more work or you health turns around. A long term situation, where you are unlikely to be able to increase your income in the near future to stay on top may require you to investigate longer term debt management solutions to allow you to gain control.


1. Set your financial goals

Very important and if you haven’t yet go back to Step 3.

2. Determine how much you can afford to pay off your debt by setting up your budget.

This requires you add up your income and subtract fixed expenses.  The left over money is for discretionary spending and paying down debts. If you have more expenses than income after paying only the minimum towards your debts, you have exhausted options for increasing your income or reducing your expenses further then you will need more help than a simple debt management plan skip to Step 5.

Now that you know where you are financially, where possible stop. Stop using your credit cards and end the debt cycle. Stop to think before making that next purchase, is it necessary? Can I find a better price? Make every move a step forward from now on.

3. Implement a pay down strategy

Explore snowballing or stacking to pay off your debts.

4. Track your progress

Tracking needs to be done weekly to ensure your day to day expenses are in line with your plans and monthly to review and hopefully embrace the emotional rewards of progress or if it is going pear shaped, get help to get you back on track.

STEP 5– Explore options to Eliminate or Negotiate your Debt

Did you go through Step 3 and find out that you are way in over your head? Are you incurring increasing expenses that you cannot cover with your income? Did you come straight to this step because you are at the brink of despair and want the eliminate option straight up? Do you need a short cut? That short cut option may be available to you or it may not. There are many roads to eliminating debt, short and long term solutions are available; all depending on your specific circumstance.

Short term debt management solutions can take the form of reassessing the way you manage your budget; Debt Consolidation; Financial Hardship Negotiation, Informal Arrangements; and Mortgage options for when you are really struggling.

Long term debt management solutions look more like Debt Agreements; Bankruptcy; debt pay down strategies; Informal Arrangements; Personal Insolvency Arrangements. Any one of these short or long term options might work for you. Read up on them to gain a greater understanding of what they entail and how they might help your situation.

If you have got to this point and just feel completely overwhelmed perhaps you need some guidance.  We are here to help, we can discuss debt management options available to resolve your specific situation.  Jump on the phone for a free, no obligation phone consultation or complete the request a phone consult form and we will call you back at a time convenient to you.

STEP 6 – Consolidate and Automate to keep your plan focused

Now that you have set up a get out of debt plan, sticking to it is key to achieving your goals. You have visioned the ideal outcome it is time to set up the auto-pilot.  Automating your repayments is a great way of tackling this.  Setting up auto debits for bill and debt repayment is something you can organise via your internet banking. This is how you ensure the bills are paid before the discretionary spending kicks in.  Helping you to stay on track and reach your goals.

Too many bills or debts to juggle whilst managing irregular payments can thwart these efforts and sometimes become too much to handle.  If this is a step beyond where you are at, then exploring your options for consolidation, budgeting or debt/bill payment services are imperative for moving forward. For example, one of the advantages of a Debt Agreement for those with unmanageable debt is the ability to consolidate all the unsecured debt into one repayment which can be automatically debited from your account on payday.

STEP 7 – Keep on track – Setting great financial habits that are not so hard

Success in any endeavour means doing something on a regular basis to achieve the outcome you desire. Success is very rarely something that happens haphazardly.  It requires effort on your part to deliver the final outcome you are hoping to achieve. Making good financial practices a habit can be difficult if you maintain a negative mindset around doing something to achieve your goals. It doesn’t have to be this way.  Setting your financial goals helps you to set a positive empowered mindset around dealing with your finances. Maintaining good, regular financial practices means committing to a time and place every week for reviewing your budget and tracking your money. It means being vigilant about maintaining a lifestyle that supports you achieving financial freedom. It means holding your vision in your mind on a regular basis; especially when times are tough and the stress is great.

The hardest step is the first step. Then sometimes the subsequent steps are hard too. But the more you complete each week with a sense of success in achieving your financial goal for that week (by doing the work), the easier you’ll find maintaining those positive financial habits.

You’ll no doubt face resistance to creating new habits. To date you may have been financially fancy free. Or perhaps you’ve been struck with bad luck and lost a job or had health issues. Whatever the circumstance is, the fact remains that change is required. Embrace the change and set yourself on your journey towards debt freedom.

Good financial habits look like this:

  • Monitoring your statements
  • Putting extra funds to work.
  • Watching your interest rate
  • Setting up an Emergency Savings Fund
  • Understanding how to check and monitor your credit score


If you’re facing financial hardship we are here to talk about a solution. Call us on 1300 887 211 or Book a Free No Obligation Phone Consultation with our friendly team and we can discuss debt management options specially focused on your personal situation.