work out what you can afford to pay
Knowing what you can afford to pay is an important first step in getting your debt under control. Having this information handy will make the conversation and negotiation with your creditors much easier.
This information alone won’t solve your debt problem, but starting here helps you see where your money is going from week to week and also helps your creditor understand your finances.
How to work out what you can afford to pay
01
Add up all your income
Make sure you include all sources of income including:
- salary or wages
- Centrelink or pensions
- Family Tax Benefit and/or child support
02
Add up all your expenses
- Be realistic. Most people underestimate how much they spend
- Make sure you estimate enough for food (benchmark is around $130 per person per week)
- You’ll also be surprised how much those odd things you don’t normally think about – such as presents, haircuts and the kids’ lunch money – add up. Put them in too
- Leave a little for a rainy day. 10% of your income is a benchmark, but even $5 is a start
TIPS
If you’re spending more than:
- 10% of your income on utility bills (water, electricity and gas); and
- 30% of your income on rent or mortgage
you may not be able to pay your debts. Call us on 1800 007 007 to speak with one of our financial counsellors.
Resource
It’s much better to use a tool to help you work this out so you don’t forget anything. Try using MoneySmart’s Budget Planner.
You might feel overwhelmed, but you have options and there are steps you can take yourself. But if you feel you need a bit more guidance or need help quickly, simply call us.
