How to cancel your debt this year

Four steps to take control of your finances.

Did your financial plan fly out the window in 2020? Here are five ways you can get back on track to make the most of the new year. 

Make a commitment

Consider what you want your life to look like in 12 months and whether your debt is holding you back from achieving any goals. If debt is overwhelming your life, make a commitment to start tackling it and set aside time to assess your finances. 

Review all outstanding payments

It can be difficult to know what to pay off first so start by reviewing your outstanding repayments and work out which are the priorities. Some debts may have legal implications attached so this will push them up the priority list. High- priority debts could include mortgage repayments, car repayments, utility bills or credit card bills with a high interest rate.

Review your budget

The next step to getting your debt under control is to review your income, add up all your expenses, and then figure out if you can afford to pay off any of your debts outright or make extra repayments. Having this information prepared will make conversations with your creditors in the next step much easier.

Chat to your lender about your options 

Remember, you’re not alone. 

By talking to your bank, lender or creditors, you can explain your circumstances and find options that suit your circumstances. 

This could include consolidating debts into one repayment or applying for financial hardship support. 

Most lenders have a team that deals specifically with financial hardship and will be able to talk you through the options you have such as time extensions or payment plans. 

You can also access financial counselling services through the National Debt Helpline on 1800 007 007. 

For more information about managing debt, visit RACQ’s Financial Wellbeing Hub.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs.  Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.