Possible Debt Consolidation

Hi Everyone, I'm trying to take the first steps to get out of debt. My current situation is this - work full time, divorced and have children in shared care. The only income I have is from my job (80k) about 75k because of salary sacrifice and $350 per month from Centrelink for Family Tax Benefits and Carers Payment for one of the children. After all deductions, I clear $2,020 per fortnight. I do not receive child support even though my ex-husband earns 50k more than I do. Out of my salary, my deductions are tax, superannuation, HECS debt and salary sacrifice for my car. I have 2.5 years left for that then there will be a balloon payment at the end.

I have struggled and had to use what savings I've had to get by each month. I calculated today that I owe 16K. This includes $5,200 left to pay for my son's braces, 6k from a personal loan that I stupidly took out to squash the debt I accumulated when setting up our home. The rest was from an urgent trip overseas to see my father before he passed, then a new fridge, school excursions pre covid etc. I have tried to contact the National Debtline on numerous occasions and get cut off every time. What is the most sensible way forward? One payment would be easier than 10 different payments every month. The interest rate is another problem. I had a direct debt bounce last week and I know this is a terrible place to be. My credit rating is good and at some stage in the future my dream is to buy a house for us but until we're in a healthier spot financially for now it's only a dream. I've thought about trying to get another job but I'm unsure how I could do it when I work 50 hours a week.

I hope someone can share a way forward. Thank you for reading.

EDIT - I just wanted to say thank you to everyone for the helpful links and many PM's reaching out. I'm humbled and also relieved that I'm not alone getting out of this deep hole. I can share one positive outcome for today. I phoned my NBN provider and my monthly internet has been reduced to $65. I was previously paying $75! It's probably not a great deal for some but it's a saving none the less. I need to have internet access for research and planning purposes when I work at night after my children have gone to bed. I didn't consider GEM and GO credit cards because I never used the cards! I made a purchase on each last year and filed the cards somewhere never to be seen again. Anyway I contacted Latitude and have reduced both debts to the minimum until I've seen the financial counsellor next week. I was behind on one of them and had to pay $40 to catch up. The next payment is due next week already. I'm trying to get hold of the bank that has my personal loan to ask if anything can be done there. I have opened two ING accounts as per the Barefoot Investor book and will open the rest tonight. I have to contact ING because I couldn't see how to do it in my account!


  • Downsize the home?

    • We have. Live in a unit instead of a house.

      • +10 votes

        $80k salary is pretty good.

        I would go over everything budget-wise if I were you. Just put it on a spreadsheet. The next step is to open a new bank with several accounts. And use a certain account for certain expenses, certain account for emergency fund, certain account for actual savings/wealth building. Then look at the expenses and weed out what you can. Otherwise, see if there's things you can change for the better (the biggest improvement most people make is: cutting out restaurants/eating out, in to home cooked which are healthier and cheaper, the annoying portion is the effort and time).

        Read up (or watch) on Dave Ramsey and his 7 Baby Steps, or the Barefoot Investor.

        • YNAB works better for me by making metaphorical 'bank accounts' - i think YNAB calls them envelopes in their training information. I recommend it to anyone looking to move away from living paycheck to paycheck. Use their tutorials as they are very useful.

        • The above advice from Kangal is good - you can buy a cheap enough fridge that it would barely impact you financially - did you? Be reflective on how you see and value money and then you'll have to do the hard slog to change that view to budget more.

  • hmm…only in austrlia that one can be single, earn 80k a yr and still be in financially hard off…maybe downsize. You're clearly not budgeting, maybe eating out etc

    • austrlia

      Where is this place you speak of?

    • Obviously budgeting is a problem. 80k seems like a lot for a sole parent…. my deductions chomp a lot off of that. I also pay for everything for the children. Some families are lucky that mum and dad contribute financially to the cost of raising children. I wear the costs for everything from clothing to medical as my ex husband doesn't pay $1.

      • right…i know famillies that are living off 40k a year…the downsize and budget.

        • That's great. I'm trying to find a way to sort it out while providing for 3 dependents.

          • @AussieDolphin: goodluck, i meant no offence. Just you shohuld budget more and live on a tight budget till you get out of debt- then should be alright after

            • @funnysht: All good I'm trying to find someone to help me with a budget. We can't live like this for much longer. Thank you anyway.

            • @funnysht: You keep saying “you should budget more” over and over without providing any valuable contribution then say ‘i meant no offence’. This is toxic.

              OP, try the barefoot investor book. Did wonders for me.

              Despite what anyone says, $80k pa before tax is not a lot. Just housing will eat away at a large chunk of whats left over. Keep trying the hotline and stay away from the for profit debt consolidation mobs.

              • @Vote for Pedro: maybe live in an apartment then? That's not called budgeting..that's just called common sense

                • @funnysht: Toxic. If you can’t be constructive piss off

                  • @Vote for Pedro: It's not toxic - OP probably needs a reality shift from the past living with two incomes, it's a positive thing that it's absolutely possible for her to get out of debt and provide for her family. From a family of 7 who were on 40k when I was younger, I'd recommend the following:

                    • Focus on non-essentials that cost a lot first - is it possible to cut them out? E.g. Smoking, Drinking cost $$$
                    • Do you need your car for work or for grocery shopping or for your kids?
                    • What do you buy for food - do you shop discounts, home brands and buy in bulk? If you eat takeaway a lot due to time constraints, really look at how you can work on this - food can be one of the biggest cost sinks and there's nothing wrong with eating a few eggs, toast and baked beans for dinner.
                    • Check your bills for cheaper options - electricity company, internet company, phone company. You can get a good deal lower than $20 a month for phone plans with unlocked phones - if your dependents have phones as well as yourself this could be a big cost saving.
                    • Are there any extra items you don't strictly need that you can sell off to get a headstart?

                    Debt can be a really scary and crushing weight on your shoulders and you don't need that on top of your dependents and don't listen to anyone who questions the cost of braces - be proud of doing the best for your kids regardless of this debt.

                    Good luck!

              • @Vote for Pedro: And here we have the problem if $80k a year isn't considered a lot, enough for them to be on a family tax benefit and say 50% of the population falls below this line then we have a crisis on our hands.

                And this is why houses have wayyyy further to fall, except the top 20% are pushing the prices up as investors

                • @Drakesy: I would say 80k might be a lot for a single person? I don't know but with deductions and raising children its tight for me. I'm trying to make it work though.

                  • @AussieDolphin: you mention braces, i'm guessing teenage boys are in the picture, there is your grocery bill out the window already (the advantage is you can probably get away with loading them full of pasta)

                    While 80k does seem a lot to me, i would try to knock out things that run interest like the personal would have to go first, hecs i think ato could probably be more understanding.

                    When i used to be able to hang out in libraries, many of them had flyers for local financial aid or debt management associations, maybe see if there are still some around ?

                • @Drakesy: We have a structural problem in our economy. It needs to shift back to the centre. Keeping housing expensive drives behaviours that suit the top echelons of wealth.

              • @Vote for Pedro: The median Australian income is $50k. $80k is a LOT.

                • @Trippelsewe: I’m not saying it’s not more than median but i am saying its not that much when you consider tax, housing (and ancillary), 3 kids, transport to/from school/work, food. It is doable definitely but an unexpected expense here and there can be hard to recover from. $80k single income with 3 kids is definitely not rolling in cash.

                  Also, average income is $89k. https://www.abs.gov.au/statistics/labour/earnings-and-work-h...

                  • +10 votes

                    @Vote for Pedro: average and median are two different calculations, if my memory is correct, median would be the most reliable indicator

                  • +3 votes

                    @Vote for Pedro: agree here. 80k Gross remember also.
                    3 kids.
                    its tough.
                    Those commenting, may nay not have kids, or have the outgoings of the poster.

                    • @taoz: I was on $80k gross on a single income and 3 kids just last year and managed to save a bit of money despite being forced to buy a car (second hand) and not trying to save as much as I should have (too much takeout and gifts). It’s not rolling in cash, given the high rent prices, but it’s also not really debt territory.

                      What I’m trying to say is… you can totally do it, OP.

                      You’ve had some really good advice in this thread. Even if you don’t manage to stick with the barefoot investor or a budget, at least start with making small changes. Try to negotiate better phone/utility deals etc. Think twice before any purchases. Cut down on take out. Buy food in bulk/specials. Change to home brand items, skip soft drinks and fancy ice creams. Go Kmart for clothes. Use Kmart shirts instead of the school logo ones for school. Direct debit a small portion of your wage to a savings account on a bank you don’t use regularly. I’m trying to save more this year and you have to constantly question yourself on whether you really need whatever it is you’re about to buy. No more lunches or coffees at work.

                      Regarding consolidating the debt, someone had a good idea regarding a 0% balance transfer offer. See if you have any available. Pay off all the other credit cards and close them.

                      You need to get into the mindset that if the funds are not on your bank account, then the expenditure should not occur. I have kids too. I love them, but I’m not sure I would have put braces on a credit card unless it was a medical emergency. Having the “don’t touch cc unless the funds are in the bank” mindset means that you push yourself more to always make sure you have funds on your bank account to cover for emergencies.

                      • @Laurana: Useful tips Laurana, thanks will use some myself

                      • @Laurana: Still remember my PhD days when I was on an $28,000 APA scholarship per annum. I was able to get by by being frugal and careful with money. Till these days it's the best skill I gained from doing a PhD.

                        • @bruceclipse: Agreed, time at university spent working weekends for next to no money just to get by was almost as important a lesson as university itself.

                          It taught me how to be frugal and only splurge when you have the funds available. If only many of those who went straight into working could learn this as well our household debt levels would be slightly more under control.

                        • @bruceclipse: For sure! Ramen noodles (add an egg and some spring onions to be fancy) and lots of rice dishes are a right of passage.

                          We lived on my mom’s $30k income for a number of years, and my first job paid $7.5/hr. Even though I waste a lot of money now, those skills learned early do set you up for life.

                • @Trippelsewe: Noticed correct AVG salary income noted! 👍👍👍

              • @Vote for Pedro: OP you can borrow these books like Barefoot Investor from the library rather than buying it :)

            • @funnysht: Mate you are not helping at all.

          • @AussieDolphin: I would apply credit card with balance transfer facility at 0.00%
            Pay off debt from that and make sure pay every month minimum payment before due date and do not use that credit card.

            Also make sure at end of balance transfer deal pay off credit card full.
            Some credit card got 24 months balance transfer deal.

            • @Zonty: Are you aware of any please? Google is showing me everything with high percentage interest.

              • @AussieDolphin: Here's a 26month one from virgin money (make sure to select the balance transfer one, not purchase one)

                Whatever you're approved for you can either transfer it to an existing credit card, or if you dont have one, get a cheque to your self (a feature specific to virgin / citibank),

                PAY IT IN FULL BY THE END OF 26 MONTHS
                DONT MISS ANY PAYMENTS

                • @pondlet: I'd be wary of any Citibank backed card, they are notorious for declining with little reason. You need to tread carefully as you will damage your credit rating and end up in a debt spiral.

                • @pondlet:


                  This is great advice and critical for any balance transfer.

                  If you absolutely need a credit card for other spending, use a different card.

                  • @Sean R: Yeah, a balance transfer can save you lots but can also cost you more if you're not diligent. It doesn't sound like OP has any trouble with impulse spending, just happened to need the money.

      • Why does he not pay anything? Seems like he should be.

      • How do you end up with kids in shared care and no child support or any money at all to contribute to the kids? Is it because of the family benefit which is a substitute?

        • The benefit has not substituted the child support and the system doesn't work like that. Due to multiple child support agency errors, emotional abuse, him ignoring csa contact by phone and letters we have this situation. I got $13 a month until 4 months ago.

          • @AussieDolphin: How can people (your ex) be so insensitive to their own family and kids :(
            Can't even fathom the amount of stress you would be going through every day. I hope you get out of your debts soon.

            • @Cyberninja: Sorry, this is only one side of the story, Probably best to not judge or take sides without knowing both sides of the story.

              • @lonewolf: OP's story doesn't even remotely pass the sniff test. They completely contradict themselves several times. I think we'd be finding the actual situation here is vastly different to what's being told.

            • @Cyberninja: I'm surprised by families that get along,this may have been overseas but I've had uncles that literally tried to kill us (gun shot through living room, rammed with car ect) and the rest of the family complacent. So many of my friends have divorced parents of which one doesnt give a crap about their existence
              wow nice families, australia never ceases to amaze, the tourist bureau should advertise this

          • @AussieDolphin: Thats terrible. Sorry to hear it.

      • +2 votes

        Wow, that's harsh. Have you seen a lawyer regarding sharing of certain expenses for said child? He is the father and should be paying more then a buck.

        • Yes we attended mediation about it. He lied and broke the orders. This means I have to engage a lawyer again :(.

        • Maybe they have 50/50 care? Maybe he does share costs but just not pay directly to her etc.

          It's always hard only getting one side of the story.

          • @brad1601: I have 51% care, he has 49% care. He does not pay child support and has never reimbursed half of any costs ever incurred to date despite receipts being provided. Nothing whatsoever. No money has gone via anyone else either.

    • …only in austrlia that one can be single, earn 80k a yr and still be in financially hard off

      Only in Australia can people chime in with a useless comment without even reading 25% of OPs post. How many times does OP mention their child?

  • There are only 2 ways to get out of debt.

    Reduce your expenditures by cutting out all non essentials then use the savings to pay down the debt.

    Or increase your incomings, ie get paid more.

  • Get ex to contribute to kids braces.

    Why did you get a novated lease? They are expensive compared to owning a $7k car.

    Pay down highest interest rate debts first.

    Did you receive any payout from settlements during the divorce?

    • My ex husband has ignored then refused to contribute anything whatsoever for the children. I'm trying to get in the right mindset to return to court to fight it. Some of the debt I have accrued was lawyers fees from the past

      After the divorce I walked away with a 7k car that was at the end of its life and some superannuation (25k) and a washing machine. He got everything else.

      • +22 votes

        Sounds like you need a better lawyer, if you got the kids then the majority of the assets went to your husband then you got really screwed.

        • I did get screwed. I was studying at the time of the divorce and didn't have a lot. Thank you anyway.

          • @AussieDolphin: You dont need alot, you could have had nothing and had your husband pay all your lawyers fees. You really should get a good lawyer.

            Sometimes you have to have your priorities in order, and a divorce is up there with buying a house and getting married. You should focus everything towards that.

            • @garetz: I dealt with the narcissist until I had to seek counselling. Three trips to court and I was done.

              • @AussieDolphin: Narcissists are relentless, well done you for getting to the other side even if you got screwed in the process. Sometimes your mental health is worth more than money.

            • @garetz:

              You really should get a good lawyer.

              Getting divorced is probably one of the most stressful things you can do especially when children are involved. Most people get a lawyer and expect them to do a good job. If you have never used a divorce lawyer it can be very hard to tell whether you have a good one or not, let alone know what you are entitled to.

              Also a lot of people just want it over and don't want to fight and fight and fight, which can possibly be more scarring than why you are getting divorced in the first place.

        • -16 votes

          Guessing short marriage and husband maybe older and brought a lot in and also had a much better lawyer.

  • Not a super go to tip, but this worked for me in the past with discipline self management:

    If you want to immediately cut interest, look into a balance transfer credit card

    The cost is the annual fee (don't go for % fee type cards). There are a few $99 cards around with 0% balance transfer for 18 months. (Some 12m or 24m)
    Minimum balance is around $6K, depending on bank and salary etc.

    This will give you relief for 18 months on not incurring interest and a stable way to pay it off in 18 months.

    You need good everything to pass for a credit card.

    The risk with a balance transfer is:
    - after 18 months the interest rate kicks in at around 22% on remainder owing.
    Plan ahead and pay it out before 18 months
    - you must pay the minimum monthly otherwise you will incur interest
    - obviously, you will have a balance on your card until you pay it off, which could affect credit history
    - you must not use the balance transfer credit card, otherwise you will incur interest. Store the card away.

    Again, not highly suggested however, on the 2nd last month of the balance transfer period (eg. 17th month) you could apply for another balance transfer card with another bank and do it again (provided you still have stable job, good repaying history etc)

    This method works at the cost of an annual credit card fee, and zero interest. But with discipline repayments monthly.

    Since you have $16k debt, I would try get a $8K or $10K balance transfer card.
    The remainder of the debt could be:
    Option 1
    Apply for 2nd BT card with different bank, if you have an approved 1st card (don't apply at the same time). But having 2 BT cards may be difficult to get approval and requires super discipline repayments.

    Option 2
    Ask the dental place for payment plan for that remaining $5K and repay monthly

    Option 3
    Get help from family to cover the $5K and repay monthly

    Option 4
    Continue paying down the $5K

    I'm not sure what is the debtor you are paying, is it 1 credit card? 1 loan? Is it multiple debtors?

  • Hi, thank you for your suggestions. My problem is a case of multiple debtors no credit cards. I'm paying the balance of my sons braces monthly already. I don't have any family in Australia sadly.

    • I've done a balance transfer once on a creditcard that was able to send a cheque to myself. That way the funds could be used anyway I wanted

      That was about 10 years ago and not sure if they still do that today. It was a citibank cc

    • hi there
      you can get the funds via balance transfer to an existing credit card, then transfer the funds to your linked bank account. Or you can close the existing card (after receiving funds) and typically the bank sends you a cheque on the balance remaining, or they electronically transfer to a linked bank account.

      The balance transfer method is essentially 'no contract' other than the credit card 'terms & conditions'.

      You want to cut at least half of your $16K debt and stop the interest as quickly as possible, and the balance transfer credit card is the easiest option (in my experienced opinion).

      Even if you get a $6K limit credit card (typically the lowest you can get), that is ALOT of interest saved on a $6K personal loan you have (I'm guessing it's around 10 to 15% interest). The money you are currently burning daily on interest could feed your family for a week.

      Attack your debt in parts, break it down.. Sort out the debt that has the highest % interest first, this is your enemy and you need to kill it quickly..
      The debt that has no interest (if any), just pay minimal amount consistency while you have enough funds to sort out the higher interest debt..

      • $6k do the balance transfer to wipe out the personal loan. I guarantee you this is the highest interest part of your debt.
      • $5k dental on payment plan, is that directly with the dental place? if so, OK that is fine if the dentist is not charging you interest, then just continue with this payment plan. if not with the dental place, who is the debtor you are paying?
      • $4k remainder, you haven't mentioned what this debtor is, is it a credit card, a loan? is it a company? what is it that you are paying to?

      If you attack your debt in parts, it will make you feel in control and much better, even though you still have a debt, not paying interest is a much better position than a full debt with crazy interest.

    • Your son will thank you for his braces. Just remind him to never ever stop wearing those retainers until he is like, 40 when his wife, kids and colleagues don't care about how he looks anymore. I jest but i wore my retainers intermittently in my late 20s and I had 1 teeth move slightly out of ideal alignment, hard to tell from looking but I feel it every single time and it just annoys me.

      • I hope so :). He had moderate overcrowding and an overbite. After 3 months his teeth are look better.

        • Not sure how old your kid is now but I got my braces in my late teens. I don't know if it was my self-confidence or if I was truly ugly with bad teeth but I could feel a huge difference in my social life. Don't let anyone make you feel like its the wrong choice. If he keeps his retainers up, you improved his life a huge deal in the long run.

          I don't know if you've come across this link before. https://moneysmart.gov.au/managing-debt/debt-consolidation-a... and its hard to give advice without knowing the breakdown of your expenditure and your debt repayments. It does sound doable based on your income, I would really try to minimise expenditure for a few months to see if you can chip away at your high interest debt. This means bulk buying, meal prep and no eating out. You need to try and get your kids on board too, you'd be surprised how much sense they can make sometimes.

  • You are in need of a financial counsellor. You will meet in person with a financial counselor who will look at all your finances (income, debts, expenses etc.)

    They will be able to help you make a budget and can negotiate with your debtors to arrange payment plans etc. or recommend ways to consolidate your debt in a way personalised to you.

    This is a free service!! Find more information here. That Moneysmart website is a great resource as well for anything money related.

    All the best!

    • I agree, I tried the National Debt Helpline four times last week and after holding for a very long time my call was cut? lost? I'm hoping they are the right place to seek the support of a counsellor, budget and repayment plan etc.

      • I'm guessing they are very busy at the moment with people affected by coronavirus. Try calling early when they first open, or use the link I posted to find the nearest financial counselor to you and contact them directly

      • Majority of their staff were probably on holidays due to Xmas/NY.

        If you try this week or next week they will likely have more luck.

        Either way, a financial counsellor is definitely what you need now. Just make sure in the interim that you sort out that missed direct debit, last thing you need is a missed repayment showing up on your credit file.

      • Forget them. Ring the Salvos financial counsellor OP. Even if they can't help for whatever reason, they will definitely know someone who can.


  • This is just my idea to get over from debt. As you have 80k income, I think it should be around 62k after tax. So if you are going to pay all debts in a year, you have to save 25% of your income for the debts. So, better to have a deadline and break the payment to small segments as you wish. In the meantime, you can also try to find ways to increase income.

    Make an Excel sheet with all income and expenditure in a month (i.e. budgeting). So, you will be able to find what are the most expensive line items on the sheet. Check whether you can substitute any of those with cheaper options and save some money to early settle any of the debt with that. In simple terms, if you can reduce your monthly expenditure by 25%, you can settle the debts by end of the year.

    Try to finish in order of smallest debt to largest one. So basically, it would feel like consolidating debts to only largest one with time. Consider current interest rates of each as well.

    These are some general tips which you could use to reduce expenditure (some of these many not be suitable for you, just sharing most of the things I do). When saving, every cent counts.

    • buy groceries in bulk at a green grocer/Asian mart than buying from a supermarket (ex: 5kg potatoes could be ~$5-6 at a green grocer, 4l olive oil, 5kg onion, 20kg of rice)
    • definitely reduce eat-out or takeaway, if you don't have much time to cook each day, you can do a simple meal prep for a week (ex: rice + meat + vegetables). You will be amazed how much you can save if you stop eating out.
    • try to find alternative and cheaper options, may be on sale. ex: instead of branded cloths, try Kmart sales (ex: $3-5 a piece).
    • unsubscribe from unnecessary subscriptions, at least for a few months. May be you can use alternatives (ex:for entertainment, instead of Netflix, you can use 7-plus/SBS-ondemand etc. or share with some friends)
    • try to reduce expensive phone bills, you can do sim-swapping like popular deal on Kogan for 3 months/$15 (so monthly ~20GB data for just $5).
    • If you are happy with some reduced internet speeds, you can also use some unlimited data with capped data speed (for an example, I used to have a 200 GB/ $60 per month one but now I use a $5 per month unlimited data sim but capped at 1.5 Mbps speed, so I can save $660 per year )
    • reduce expensive travels/trips (like inter-state/overseas) at least for some time. instead of that you could do day trips in the local area, bush walking, going to the local beach etc.
    • check whether you can down-size the car (at least for some time) to get rid of that debt.
    • always think about the "value addition factor" of any payment. ex: How could this payment will increase my quality of life ? How long will I use this ? What would be the performance/$ valve ? What would be the break-even/pay back time (ex: in the long run, solar water heater will be cheaper than a electric water heater) and take decision with these information. This will help to find alternative products in the long run, specially with the brand names. I always try to find second-hand items.
    • Thank you so much for the informative reply. I'm not sure about the car as it's just big enough for us. I also stupidly salary sacrificed it and there are 2.5 years left to go. I have also tried contacting the National Debt Line but after holding for nearly an hour each time my call is cut??? I can't even sleep because of this debt.

      • May be because of the holidays. I think it would be better to try next week, early in the morning. It seems that there is a chat feature (weekdays 9.30am to 4.30pm) & call back option in here. That "call cutting" after one hour may be just an automated timeout.

      • Maybe put up your car on Carnextdoor and earn some extra income from it when you’re not using it.