How to ditch debt fast in 2021

If there’s one thing 2020 gave the average Aussie, it’s a change in perspective when it comes to money. Not only did we take saving more seriously, but one in four Aussies vowed to rid themselves of debt. 

“Historically, Australians haven’t been afraid of debt, particularly through our love of credit cards. We’ve racked up debt with the assumption that job security and a steady paycheck is a relatively safe bet, but a global pandemic has tipped that notion on its head as unemployment soars,” said Mozo Director, Kirsty Lamont. 

“For many people, Covid-19 has been a wake up call to get their finances in order, and eliminating debt is a key part of that.” 

If you’ve never had to take a serious look at your debt before, it can seem a little daunting. So to equip you with skills you need to make your debt disappear, we’ve listed our top four tips below.

Do things one a time

A common struggle that comes with multiple types of debt is knowing how to effectively tackle them all. To remove this daunting task there are a couple of methods you could try, like starting with your smallest debt and paying it off in full before taking the same approach with the larger debt. 

Just keep in mind that this doesn’t mean abandoning your larger debt, but rather making the minimum repayment for now. 

An alternative method is to start with the debt that is the most costly, or in other words, has the largest interest rate before moving onto the other. Just be sure to choose the option that works best for your financial circumstances and can help you get out of debt faster.

Bonus tip:

For some of us managing multiple debts is easier said than done. In this case, you might want to consider a debt consolidation loan. This is a loan that combines multiple debts into one manageable repayment on one interest rate. You can compare debt consolidation loan by checking our personal loan comparison tool.

Take up a side hustle

One trick to getting debt free quickly is finding ways to put extra cash toward it, like picking up a side hustle. Depending on your skillset, this could be freelance blogging, becoming a dog walker or even doing small jobs on Airtasker. Side hustles like these tend to not be so time consuming and are flexible, meaning you have the choice of doing them on your schedule.

Bonus tip:

If you’re not ready to totally jump into the side hustle world, you could start small by selling old junk online. It’s also a good opportunity to declutter your home with stuff you no longer need!

Make more frequent repayments

During 2020 many Aussies managed to save more than usual, thanks to zero travel and spending less time outdoors. If this sounds like you, why not use that extra cash for a good cause and put it toward your debt. Not only could this mean getting debt-free faster, but you could also save yourself a bundle in interest.

Bonus tip:

Crunch the numbers on how much you could be saving on your personal loan by making extra repayments by having a play with our personal loan repayment calculator. Or if it’s credit card debt that’s got you worried, you can do the same with our credit card debt repayment calculator.

Refine your budget

Another way to make room for some extra cash to repay your debt is to revisit your monthly budget and see where you can cut back. Depending on your spending, this could include things like the streaming subscription services you haven’t touched in months or your weekly take  away splurge.

Bonus tip:

If it’s been a while since you’ve had to devise a budget, our budget calculator can help point you in the right direction. You’ll be able to have a comprehensive overview of your spending, allowing you to work out where you can afford to cut back.

If you’re ready to kick debt to the curb in 2021, you can check out our personal loan comparison tool to compare debt consolidation offers or have a read your guide to paying off credit card debt.