10

STEPS TO
GET OUT OF DEBT
AND START SAVING
Imagine a life free from
money worries
Welcome to 10 Steps to Get out of Debt
and Start Saving!

Most people are saving for something and

nearly everybody would like to look at their
bank account and see more money. Yet
nearly one-in-seven Australians have no
cash reserves to fall back on. If that wasn’t
concerning enough, household debt is at
record levels and job security has never
been more tenuous.
It might be tempting to throw your hands The information contained in this guide
in the air and give up, but that’s not the is of a general nature. If you have any
answer. The true answer is to get financially questions about it, please don’t hesitate to
fit! And the good news is that financial contact us. We’d be pleased to help create
fitness, just like physical fitness, can be a free customised money plan just for you.
improved little by little. Positive changes,
no matter how small, add up over time
— which is a great reason to start your
journey NOW.

But how do you pay down debt and

develop cash savings when it feels like all
your money is taken up just living? This
guide aims to show you how in 10 easy
steps. Along the way, you’ll discover that Tammy Barton
the principles of money management are MyBudget Founder & Director
actually pretty simple. The key is sticking to
them and the good news is that we’re here
to help with that too.
About MyBudget
MyBudget helps people live the life they
want, free from money worries. We’ve
been proudly fulfilling our mission to
reduce financial stress in the community
since 1999 and have helped more than
65,000 Australians with our caring money
management support and structure.

Pay your bills on time, have savings

in the bank and enjoy a debt-free,
stress-free lifestyle.

Contact us today to book your free

personal budgeting consultation.

mybudget.com.au | 1300 300 922

Contents
Step 1: Talk about money 1

Step 2: Get clear about your financial goals 7

Step 3: Create a workout plan for your money 13

Step 4: Grow a savings safety net 19

Step 5: Demolish your debts 25

Step 6: Defeat debt stress 33

Step 7: Quit your plastic habit 39

Step 8: Reduce costs in big and small ways 45

Step 9: Explore ways to increase your income 51

Step 10: Review your budget and goals 57

1 Talk about
money
2
Money is a fact of life, yet Fortunately, however, things are changing.
Money talk is coming out into the open.
a subject often difficult Couples are discussing their financial
to bring up in general priorities and goals together, friends are
sharing money tips and family members
conversation. are supporting each other through financial
Money can also be charged with challenges and achievements.
emotions, which makes talking about
No matter what your situation is — trying to
finances even more difficult, especially
save faster, struggling with debt or simply
when financial stress is involved. It’s not
wanting to get ahead — talking about your
surprising then that money problems are
finances with someone you trust can be a
a common cause of relationship tension
great way to look at your situation from a
and many people keep their financial
different angle.
worries secret from friends and family out
of embarrassment or shame.
Signs you could benefit from talking more 3
about money:

• You have no clear financial goals or

plan to achieve them

• You’d like to save, pay down debt or

simply get ahead faster

• You desire to live a debt-free, stress-

free life, free from money worries
4

Talking with your partner about money

Do you and your partner fight about money or disagree about financial priorities? Not
sure where to start? A good way to ease into talking about joint finances is to begin
with your financial goals. In Step 2, we provide tips on financial goal setting and an
activity you could do together.

When you’re ready to talk, we’re ready to listen

“When we talk about our future together now we’re a lot happier and a lot more
relaxed and excited about what we’re going to be able to do rather than constantly
worrying about what we can’t do.” Caitlin, real MyBudget client
 Before we joined 5

“
MyBudget we lived week-
to-week and had lots
of credit card debt. We
didn’t know when the bills
would get paid and where
the money was. We’ve
only been with MyBudget
for 3 years and now have
a property portfolio and
holidays planned. It’s what
dreams are made of.
Scott & Nicci
Real MyBudget Clients
2 Get clear
about your
financial
goals
8
Financial fitness is not
achieved by looking at
your bank statement
1
once a month.
It’s the sum of your daily money habits, Start by visualising
all of which combine to achieve your
financial goals. So what are your money your goals
goals? To save for a house? A holiday? What does your ideal life look like?
Get out of debt? Say goodbye to money And what are some dreams you can
worries once and for all? start working on immediately? Paying
Your goals don’t have to be grandiose or off outstanding bills or saving for a small
expensive to be worthwhile. In fact, it’s event, such as a date night, can be a great
great to start your journey to financial way to start feeling positive about
fitness with a few small financial goals — your finances.
for example, saving for a concert ticket or
paying off a lay-by.

2 3
Write down your goals
Writing down your goals is an important
step towards achieving them. Keep in
mind to be specific about the “what, when
and how” of your goal. For example, “I
am saving [$ amount] a [week/fortnight/
month] so that by [date] I will have [$ total
amount] to pay for my Bali holiday.”
9
Stay focused
Keep your goal list in a place where you are
reminded of them weekly, if not daily. Some
people like to pin their list on the fridge or
bathroom mirror. Read your goals regularly.
Are you on track? Do you need to make
changes? Obstacles and challenges are
inevitable, but they’re easier to overcome
when you have a target to aim for.
10

My Financial Goals
Give your dreams a deadline! Write down goal setting worksheet to get started.
your goals for the coming year and We’ve provided space for five goals, but
create a plan to achieve them. Use this the number of goals is up to you.

What specific steps do you need to take to make your goals a reality?

Start / End Date Action Required Desired Outcome

5
 11

Keep your eye on the prize

“I used to overspend. These days, I get excited about saving for a house.”
Nicole, real MyBudget client
3 Create a
workout
plan for your
money
14
We all know that
the key to getting
physically fit is to create
a plan that includes
positive daily habits, such
as exercising and eating
nutritious food.
Getting financially fit is exactly the same:
best achieved with a workout plan for
your money! That’s exactly what a budget
is — a plan that shows what you can
achieve with your money and the steps to
get there.
But I tried budgeting
in the past and it
didn’t work.
With the right system in place, you’ll find
budgeting much easier. We recommend
that you create a long-range budget that
includes all of your income and expenses
over a 12-month period and includes
contingencies for unexpected expenses or
loss of income.
Follow the steps below or contact us to
book a free budget consultation with one
of our caring specialists. We’ll create a
customised budget plan for you, which is
yours to keep for free.
How to make a budget • BILLS: Recurring bills and ongoing 15
expenses. Don’t forget to include
1. Start by getting your bills, receipts bills that occur quarterly or
and income statements together. annually and special events, such as
It may also be helpful to print out birthdays and Christmas.
a transaction list for your bank
• LIVING EXPENSES: eg. Groceries,
accounts, loans and credit cards for
petrol, bus tickets, lunches,
the last few months.
entertainment, clothes etc.
2. List all of your expenses. It will help to
• EMERGENCY FUND: An amount
group them like this:
of money you set aside from every
• DEBTS: Interest-bearing debts pay to cover emergencies and
(including credit cards), debts to unexpected bills.
family and friends, and any bills
• SPECIAL SAVING GOALS: eg.
that have fallen behind.
Holiday, concert ticket, pay off debt
faster etc.
16 1. List all your sources of income. This 3. Project your long-range budget over
will include your wages, government 12-months by adding up the monthly
assistance and/or child support. You subtotals. If your income does not
may also have income from interest, exceed your expenses, well done!
dividends and investments. You’re off to a great start and ready
to take the next step. If your expenses
2. Using a spreadsheet, organise your
are higher than your income, use your
expenses and income into the number
budget to look for areas to make
of pay periods you have in a year
savings or it may indicate that you
(12 for monthly, 52 for weekly, 26 for
need to speak with your creditors
fortnightly). Expenses that are billed
about more affordable payment terms.
over a longer timeframe (eg. annual
car rego) will need to be divided
across the number of pays in the
billing cycle.
 17

See the future

“I love the future planning tool. You can see what payments are structured to come out
in the next months and what bills you’ve paid previously. Everything is simply laid out
for you, so you can see a snapshot of your finances at any point in time.”
Bec and Jarrad, real MyBudget clients

Your budget in your pocket

MyBudget’s world class budgeting platform adapts flexibly to changes in your
expenses and income. With the Official MyBudget App, you can view and access your
budget 24/7 from the convenience of your pocket.
4 Grow a
savings
safety net
20
Savings are an they’ll add up. You can begin as simply as
dropping a gold coin into a jar right now.
essential part of being
To save regularly:
financially fit.
• Allocate a small amount of money
By having cash reserves, you reduce
from each pay into a dedicated
your reliance on bad debt (credit cards
savings account.
and consumer loans) and have the
ability to manage good debt (home and • Set up an auto-transfer or ask your
investment loans) more easily. Savings employer to disburse the money
also give you the flexibility to make directly from your pay.
empowered life choices, rather than
• The key is to make sure that the
feeling trapped by your work, living
money never touches your pocket!
arrangements or relationships.

The good news is that you can get started

on your savings safety net today! Your
savings may start out small, but in time
 ut I don’t earn enough
B 21

to be able to save

A common misconception is that you

need a high income to be able to save.
This isn’t true. A high income can certainly
help with accumulating savings, but it’s no
guarantee. In fact, high earners are often
high spenders. Financial fitness can be
achieved on nearly any level of income
with the right plan and the discipline to
live within your means. For the majority of
people, the ability to save is more affected
by how much they spend than how much
they earn.
22

Create a savings safety net quickly

Could you find an extra $2 to save today? How about $20 week? Or $100 this month?
Could you save an extra $2000 this year?

Here are some ideas to boost your savings and create a cash safety net quickly:

• Generate spare cash by selling stuff you no longer need

• Commit your tax return to your savings safety net

• Base your meal planning and shopping list on supermarket specials

• Earn extra “pocket money” with a hobby job

• Cut back on life’s little expenses, such as takeaway food and coffee
 23

Saved from stress and worry

“We have a holiday every year and I’ve got a new motorbike and Trish has got a
new car. We’re reaching goals I actually didn’t think we’d reach.”
Neil and Trish, real MyBudget clients
5 Demolish
your debts
26
It’s no secret that
Australians need to get
serious about paying
down debt.
Household debt is at record levels and,
for anyone who’d rather keep their hard
earned cash in their pocket than pay it to
a lender, budgeting is the answer.
Your budget will reveal how much of
your income you can dedicate to debt
reduction, as well as the money-saving
effects of paying down your debts faster.
People are often amazed at how quickly
their debts are paid off once they have a
budget in place.
Debt Reduction
Strategies
Choose a debt reduction strategy that
works for you:
Big Hitter Strategy
While meeting your minimum
payments on other debts, focus
all spare cash on paying down the
debt which has the highest rate of
interest. This strategy fast tracks debt
reduction by minimising the amount
of interest you pay.

Snowball Strategy
While meeting your minimum
payments on other debts, put extra
money towards the smallest debt
first, regardless of the rate of interest
it attracts. The snowball strategy
gets its name because it gathers
momentum as smaller debts are paid
off and the repayments applied to
larger debts. This approach can be
very motivating.
27
Feel Good Strategy
While meeting your minimum
payments on other debts, apply extra
funds to those debts that make you
feel the worst—often money owed
to family or friends. This can be an
excellent way to get motivated and
rebuild stressed relationships.
28

I can see clearly now

“When I needed help to figure out what I needed to pay, how to prioritise my debts
and organise what was practical, MyBudget helped by showing me who needed to be
paid most urgently, how I would be affected by payments and the short- and long-term
prospects for my finances.” Jade, MyBudget client

Pay your way out of debt

A lot of people experiencing debt stress assume that bankruptcy is their only option.
We find that the majority of people can pay their way out of debt without taking on
more loans, declaring bankruptcy or entering into a formal debt agreement. Talk to us
about a free debt assessment.
 I got back from an

“
overseas trip and I was in
a significant amount of
debt. I’d maxed out my
credit cards and personal
loans. I was living week-
to-week and getting
nowhere with my debt. As
soon as I joined MyBudget
my money worries
disappeared.

Jon
Real MyBudget Client
Live your life
free from
money worries
6 Defeat debt
stress
34
Are you regularly Sounds like you might be experiencing
debt stress.
spending more than you
Your budget will reveal how much of
earn, relying on credit your income you can dedicate to debt
cards or loans to make reduction, as well as the money-saving

ends meet, missing effects of paying down your debts faster.

People are often amazed at how quickly
payments, paying bills their debts are paid off once they have a
late or have creditors budget in place.

chasing you? It’s important to address debt stress,

not ignore it. Not only can debt problems
escalate quickly, the resulting stress can
impact every area of your life, including
your health, work performance
and relationships.
When it comes to relieving debt stress, you
have a few options:
• Increase your income
• Do you have room in your home for a
lodger? Could you take on a second
job? Sell some assets?
For example, you may be able to arrange 35
a payment plan or break from payments
while you get on your feet. The key is
to understand what arrangements are
affordable for you.

• Reduce your expenses

• How much would you save

by downgrading your pay TV
subscription or suspending your gym
membership or shifting your children
from private to public schooling?

• Talk with your creditors about

payment terms you can afford
36
Talking with your
creditors
Many people avoid talking to the people
they owe money when, in fact, staying in
communication with your creditors is the
best way to ensure that the issue doesn’t
escalate. Most creditors want to be helpful,
especially when a debtor shows they’re
earnest by creating a budget.
1. Your budget will reveal if your cash
crisis is short or long-term and, by
testing different scenarios, what sorts
of payment terms are affordable.
2. Now that you have a clear picture
of what’s affordable, contact your
creditors to discuss your situation.
They may be able to help you apply
for hardship or provide you with a
revised payment plan or payment
moratorium (break from payments.)
3. It’s important that you don’t agree
to a proposal that you can’t afford.
It may cause more problems in
the long-run.
 37

You don’t have to do it on your own

“I was suffering from depression because I couldn’t pay my bills. I had let my bills go so
long that I was receiving lawsuits. I thought I would have to go to court and that I was
going to lose my house.” Yvonne, real client talking about her life before MyBudget

Stop contacting me!

Are you stressed by the idea of talking to your creditors? MyBudget deals with
thousands of creditors every year and our experience in informal debt negotiations
means we know what sorts of terms are achievable. We may also be able to talk with
your creditors for you. Contact us to discuss a customised debt management strategy.
7 Quit your
plastic habit
40
Australia’s combined It’s little wonder the banks are so keen for
each of us to have a credit card — or two
credit card balance or three! It’s also little wonder that credit
attracting interest is cards are one of the leading causes of
financial hardship.
around $32 billion, which
means we’re paying The trouble with credit cards is that they
make overspending easy which, coupled
over $5 billion a year with high rates of interest, create the
in interest charges perfect conditions for debt that becomes
unmanageable over time. Many people
to lenders. suddenly find themselves with a massive
credit card balance and the prospect of
years of interest charges ahead of them.

So, what’s the best way to quit a credit

card addiction?
Use cash not plastic
Whereas cards make it easier to overspend,
cash acts as a visual reminder of your
budget, right there in your pocket. You look
in your purse, see that you have $80 to
last until Monday and decide to skip Friday
night work drinks so you can afford Sunday
brunch with your friends.
Transitioning to cash is easier than you
might think. It’s as simple as making one
withdrawal from the bank each week for
your budgeted living expenses. Put this
cash in your purse or wallet and watch
how you use it throughout the week. Does
it help you track your spending and resist
impulse purchases?
If you prefer the convenience of a card, 41
make it a debit card and transfer your living
expenses into a dedicated account to avoid
accidental overspending.
“But I can’t survive
without my credit card.”
You might think it sounds impossible, but
with a workable budget in place, you’ll
eventually be able to cut up your credit
cards and never use them again. You’ll
develop savings in the bank and have such
visibility over your money that you feel
firmly in control of your financial future and
able to save for the things you want.
42

What would you do with an extra $700 every year?

The average credit card in Australia has a balance of nearly $4,200 and the average
card holder is paying around $700 in interest per year. What would you do with an
extra $700?

Stretched like plastic

“I was paying one credit card with the other and this was going on month-to-month.
Friends thought I was living the high life with all the latest gadgets and things,
but I was basically living beyond my means.”
Jody, talking about her life before joining MyBudget
 Within two years, I’ve paid

“
off my $25,000 credit
card debt and now I don’t
have to worry about
money. I’m financially free
and it feels amazing.

Mia
Real MyBudget Client
8 Reduce costs
in big and
small ways
46
One thing you’ll notice
about people who are
good with their money is
that they avoid spending
it unnecessarily.
This doesn’t mean they’re miserly.
It means they’re disciplined — they have
goals for their money that positively
influence their daily money habits
and choices.
Fortunately, there are lots of ways to
cut costs and save money without
compromising your quality of life and
enjoyment. In fact, most people say they
do more with their money once they
start budgeting.
Little expenses add up
People are often surprised to learn that
a large portion of their income is spent
on discretionary expenses that add up to
thousands of dollars a year.
• Store-bought coffee: $20/week =
$1,040/year
• Fashion and gadgets: $50/week =
$2,600/year
• Alcohol: $60/week = $3,120/year
• Entertainment and eating out: $70/
week = $3,640/year
If you were to reduce your discretionary • Utilities: Use an online utility 47
spending by just $40 a week, you would aggregator to check you’re getting the
have an extra $2000 a year. What would cheapest power price.
you do with it? Take a holiday? Pay off your
• Groceries: Meal planning is a powerful
credit card? Grow your savings safety net?
way to reduce your spend on food
Other ways to save money and household supplies. Plan your
meals around supermarket catalogue
• Mortgage: Now is a great time to
specials and check your local butchers
compare rates between lenders and
and green grocers for discount deals.
look for a cheaper home loan.
• Transport: Could you reduce
• Housing: Is it time to downsize?
your transport costs by riding or
Smaller homes not only cost less to
busing to school or work? How
rent or buy, they also cost less to run.
about carpooling?
• Insurances: Review your insurance
costs annually. An insurance broker
can ease the legwork and help ensure
you’re comparing similar coverage
and policies.
48

Not a baked bean budget

“I kept being surprised by how quickly we were getting ahead and we actually lived
well. We’ve probably never eaten better. We planned our meals, went to the butcher,
only bought what we needed for the week and never let the car get empty.”
Rowena, MyBudget client
 The decision to join

“
MyBudget as a family
was one of the best
decisions we’ve made.
It has not only allowed
us to understand
where our finances
are and where we’re
heading, but it’s also
freed up more time for
us as a family.

Yvette &
James
Real MyBudget
Clients
9 Explore ways
to increase
your income
52
Increasing your income
may take a little time and
effort, but the pay-offs
for your financial future
are worth it.
Here are some suggestions:
• Take in a boarder or roommate: A
spare room in your home can be used
to generate income.
• Earn extra income from a hobby: Offer
to mow your neighbours’ lawns or
walk their dogs. Earn income selling
your handicrafts or be an Airtasker.
• Have a garage sale: Make money by
selling the things you don’t need.
• Take on a second job: Consider a part-
time job in the evenings or weekends.
It doesn’t have to be forever, just long
enough to get your finances back
on track.
• Change jobs: Research shows that
people who enjoy their jobs are more
likely to earn more and be successful.
Remember that most jobs are filled
before they’re advertised so get out
there and network.
• Ask for more hours: People in
casual and part-time positions often
experience income fluctuation when
their hours change. Make it clear to
your supervisor that you want and
would appreciate more hours.
• Develop your skills: Look for 53
opportunities to gain extra education
or skill development. Offer to take on
further duties, extra study or
new projects.

• Ask for a pay rise: Is your pay lagging

behind the market average? Do you
have skills that other candidates
don’t? Compare your current income
to the market by looking at job ads
and respectfully discuss the findings
with your boss.
54

A spare room could be your ticket to spare cash

The Australian Bureau of Statistics says that more than 75 per cent of Australian
homes have one or more spare bedrooms in them. Do you have room to accommodate
a lodger or run a hobby business from home? Look for your next roommate or lodger
online: easyroommate.com, flatmates.com.au and roomeez.com.au.

Second job, second chance

To pay down her debt as quickly as possible, MyBudget client Alysa took on a weekend
job. In 12 short months, she was able to pay down her debts and rectify her payments
history so that she would qualify for mortgage refinancing. Alysa is now saving a
whopping $700 a month in interest charges.
 Life before

“
MyBudget was really
overwhelming and
stressful. As soon as I
spoke to MyBudget I
got all my debts under
control, I could keep
paying my mortgage
and I paid my car and
all my credit cards off.
Now I can sit back,
relax and concentrate
on all the good things
in life.

Vanessa
Real MyBudget Client
10 Regularly
review your
budget and
goals
58
From one pay to the
next, your budget is likely
to change slightly.
Bills fluctuate, new expenses come up,
and your income might change from
week-to-week. That’s why it’s important
to spend a few minutes reviewing your
budget each pay period. Do you have any
unexpected bills? Are any of your bills
higher or lower than budgeted for? Is
your income what you expected?
Every few months, you should also review
your financial goals. Are you still on track?
Do you need to tweak your plan? With a
workable budget in place, you’ll have the
support and structure you need to adapt to
the continuous changes that life serves up.
Don’t forget to celebrate your milestones
and achievements, too!
The journey towards a goal is as
important as the destination
When people think about getting physically
fit, their first thoughts are often about
dieting and calorie restriction. Likewise with
financial fitness, many people worry that
getting financially fit entails being pinching
pennies or missing out on fun. This is
simply not true. Getting financially fit is
about making healthy financial choices and,
in fact, most people discover that they can
do more with their money once they
start budgeting.
Instead of worrying about money, 59
imagine having access to your exact
financial position and future outlook, with
all your bills and expenses and savings
and goals mapped out before you. Make a
change to your budget and see your short
and long-term projections change before
your eyes. Don’t worry about setting aside
savings or paying bills manually — it gets
done directly from your budget. Got a
question? Call or message your support
team for advice.

That’s exactly what clients experience with

MyBudget. We serve up healthy money
management options and help you achieve
lifelong financial fitness, day-by-day.
60

No more money worries

“We now own both of our cars, no longer have a mortgage and have no credit card
debt.” Kelly, real MyBudget client

Step 11: Say goodbye to money worries for good

Contact MyBudget today to book a free personal budgeting consultation. The
customised budget plan we create for you is yours to keep for free.
 Why not give it a go?

“
You’ve got nothing to
lose. MyBudget has
helped us unlock our
full financial potential.

Bec & Jarred

Real MyBudget Clients