3 Dumb Ways to Get Debt Free

Posted on: 02 Nov 2018


Taking a Payday Loan: It sounds like a good way to tie you over till next payday, yet most borrowers will not repay the loan in full when they get paid or might even make their debt worse by borrowing again. Payday loans interest rates can be as high at 48%, this compares to 8% to 22% for credit cards.

What to do instead: Set aside part of your income—10% or more, if you can—into an emergency fund. Even $100, $500, or $1,000 can make a big difference in handling an unexpected medical bill or car repair. Better yet, pay the 10% into your debts and watch those balances fly down.


Making an Early Withdrawal from Superannuation: This is a big no no. Depending on who you ask, its likely your Super won’t contain enough money to support you in your retirement as it is! So, taking money out will hurt you more. There are strict rules in place for early release, however early access is unlikely for debt consolidation. There are exceptions on early release, such as mortgage arrears or medical emergencies to help with debt.

What to do instead: If necessary, try other options for repaying debt—including debt negotiation, debt consolidation, or financial counselling.


Skipping Tax Payments: Not paying GST or other tax obligations so you can pay credit cards is a fry pan into the fire scenario. The ATO are far less flexible with their debt payment terms than the banks. There are major penalties for payment defaults plus the ATO are quicker on the draw when it comes to legal action.

What to do instead: Talk to an accountant or a debt negotiator who may negotiated more favourable repayment terms to the ATO. This could release extra funds to pay your other debts.


Paying off debt the right way can help ensure you don’t make your financial situation worse. Getting out of debt is tough and you might still need help even though you have tried some of the above steps. If so, contact us to discuss a debt negotiation option to reduce your debts by half or more within a few weeks of negotiations.

If you need a Debt Negotiator, or help with debt, speak to us or connect with us at www.creditmediation.com.au

If you want to find out how much you can save to help you with debt, try our debt calculator. or contact us.

This article should be considered as a guide only. If you are facing financial hardship or legal recovery action, please consult a specialist to assist you.