Managing debt

10 ways to balance your debt

3 min read

If you’ve ever found yourself lying awake at night worrying about money, you’re not alone. Unfortunately there’s no magic fairy wand to make your debts disappear, but it’s far better to take action than bury your head beneath a pillow.

While some debt, such as mortgages, medical bills or education loans, is unavoidable, we all know it’s best to side-step less essential borrowing. Financial experts agree knowing the difference between productive debt (such as a mortgage) and dumb debt (store credit cards, high interest third party borrowing, impulse spending) will help set you on the path to future savings.  

Raewyn Fox, chief executive of the New Zealand Federation of Family Budgeting Services, says there are a number of areas where Kiwis go wrong when attempting to manage their finances. The biggest mistake is made by those who avoid paying a creditor anything because they can’t pay the full amount. Fox says taking on more debt while struggling to pay off existing items is another common error, as is borrowing for every day costs.

“The next week you have the same costs plus the loan repayments,” she says.

But there is hope - Fox says knowing what you can do to turn around your financial fortunes is half the battle. She says a good way to start is by looking at the big picture.

“There is no point looking at each debt in isolation. You need to consider the big picture before taking action. Prioritise what’s important to you and what you are prepared to sacrifice to free up money to satisfy creditors.”


“Have a good look at what you’ve recently spent money on and look for spending leaks – areas where you are spending more than you thought.”


Being honest about your financial comings and goings is also critical. Have a good look at what you’ve recently spent money on and look for spending leaks – areas where you were spending more than you thought or spending on things that aren’t helping you reach your goals.

Where possible you should always align your payments to match your pay frequency; if you get paid fortnightly, it makes sense to pay off your debts at the same time. Always try to pay more off your high interest debt first. It’s worth asking your bank if they can suggest different ways to consolidate debts, such as switching to a lower-interest credit card. Seeking help from a budget advisor is also a wise move. Real life doesn’t stop while paying down your debt so planning ahead for non-negotiable events can also help keep costs down.

We all borrow for different reasons, whether it’s for housing, transport, education or even saving for retirement. Not all debt is big and not all debt is bad, but if it’s keeping you up at night then definitely talk to your lender or a trained advisor.

10 ways to sort out debt

  • Start with an honest appraisal of your balance
  • Look for budget leaks
  • Consider wants versus needs
  • Align your payments to match your pay frequency
  • Be upfront with creditors
  • Put unspent money away, don’t leave it in your everyday account
  • Talk to a budget advisor
  • Plan ahead
  • Pay off high interest debt first
  • Remember the bank is here to help you so always feel free to pop in and talk to them

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