Getting out of debt: order, method, help

Before any clever payoff strategy, there's a blunter question: which payments protect the things you can't lose? Moneysmart's guidance is unambiguous about the order — the higher-priority payments are the roof and the essentials: rent or mortgage, council rates and body-corporate fees, electricity, gas, water and phone, and car repayments if the car is how you get to work.

This ranking feels backwards, because the scariest letters usually come from the debts with the highest interest, not the highest stakes. But a credit card in arrears is a number getting worse; missed rent is a home at risk. The debts that can take your housing, your power or your ability to earn get paid first — then the strategy conversation starts for everything else.

If even the priority list doesn't fit inside your income, that's not a strategy problem anymore — skip straight to the free-help section below. Hardship arrangements exist for exactly this, and they work far better before things break than after.

With essentials protected, line up the remaining debts and pay minimums on all of them — then aim every spare dollar at one debt at a time. The only real decision is which one, and Moneysmart describes both classic orders. Small to big (the "snowball"): clear the smallest balance first, because finished debts are fuel — "paying off the card with the smallest debt first helps motivate you to keep going."

Or big to small by cost (the "avalanche"): attack the highest interest rate first, because that's the debt growing fastest — the mathematically cheapest path. When one of your debts carries a much higher rate than the rest, the avalanche's saving gets meaningful, and the tool below shows exactly how meaningful on your numbers.

Which wins? Moneysmart's answer is the honest one: "choose the method that you can stick with." The interest difference between the orders is usually smaller than the cost of abandoning the plan in month four. A strategy that keeps you paying beats a strategy that's optimal on paper — and the moment the last debt dies, redirect the whole payment into a buffer so the next surprise doesn't restart the cycle.

The third option Moneysmart lists is consolidation: rolling several debts into one loan, ideally at a lower rate, with one payment to manage. Done carefully it can genuinely help — fewer moving parts, less interest, less chaos. But the industry that advertises it hardest is not selling the careful version.

Three traps. The stretched term: a lower repayment achieved by spreading the debt over more years can mean paying more interest in total — the same term-reset arithmetic we cover in Refinancing. The upgraded security: rolling credit cards into your mortgage converts debt that could only dent your credit file into debt secured against your home. The fees: establishment and exit costs can quietly eat the rate saving. Compare the total cost over the full term, not the monthly payment.

And be wary of anyone who cold-calls offering to "manage" your debts for a fee — paid debt-management outfits sit in the same family as the credit-repair firms in our credit-scores page: charging for phone calls the free services below make better.

The most under-used fact in Australian consumer finance: financial counselling is free — as Moneysmart puts it, "you never need to pay." Counsellors are not salespeople; they assess the whole picture, negotiate with the people you owe, and know every hardship lever that exists. The front door is the National Debt Helpline (ndh.org.au), and Moneysmart also lists Way Forward, a free service that manages repayment arrangements across multiple creditors.

Every credit provider also has a hardship process you have the right to use: repayments can be paused, reduced or restructured while you get back on your feet. The pattern across every page we've written on this: the earlier you raise it, the more options exist. Debt help called at the first slipped payment is routine; called after months of silence, it's triage.

And if a lender or collector treats you unfairly along the way, the path is the standard one — complain to the firm, then escalate to the free financial complaints ombudsman. Nothing about owing money removes your rights; being behind on a card is not a licence for anyone to bully you.