Tackle your debt

1

Start your emergency fund

2

Get your KiwiSaver on track

3

Tackle your debt

4

Cover your people, money, stuff

5

Work out your retirement number

6

Set your goals, then reach them!

It’s a race to see how fast you can shed that debt.

Especially the
high-interest stuff.

How much are you carrying?
The first step is to check how much debt you have, and what sort it is. The high-interest debt costing you the most is the priority, before the stuff with low or no interest. Student loans, mortgages or any other loans that don’t charge high interest or fees are okay for now.
It’s the high-interest debt that hurts most: payday loans, credit cards, store cards, car loans. That’s what we’re aiming for first.

Focus your extra money on one debt at a time.
If you have a number of loans to repay, it works best if you focus on repaying a single debt. Keeping the rest at the minimum payment, aim all your extra money to get rid of one at a time. Which one's first?

Snowball
Pay off the smallest balance first

WHYTicking off the tiny ones first gives you momentum, motivation. Quick wins are satisfying.

WHY NOTFinancially speaking, this isn’t the quickest or cheapest way out of debt, but it may fire you up to finish.

Avalanche
Pay off the highest interest rate first

WHYKnocking off the debt that costs you most is the quickest and cheapest way out of debt.

WHY NOT Taking on a large balance first takes grit. You want to make sure you make it all the way to being debt-free.

WHAT IS
THE SNOWBALL?
Paying off our smallest debts first can really get us going. This is called a debt snowball, and it can be truly useful if you need quick feedback that you’re on a roll.
Get the smallest loan out of the way. Then take those repayments (and any extra money you can find) and aim them at the next-smallest debt, and keep going. You gain momentum, pick up speed like a snowball, get all the motivation you need to see it through.

WHAT IS
THE AVALANCHE?
The quickest way out of debt is often called an avalanche: taking down the debts in order of how much they’re costing us. Start with the one that hurts most: the one with the highest interest rate and fees. Then take those repayments (and any extra money you can find) and aim them at the next-highest-interest debt, and keep going. Rinse and repeat until you’ve knocked them off and they all come down in an avalanche.

Get debt on your side
Debt should be a helpful tool. It can be used as leverage to get us climbing (like borrowing to study, to start a business, to buy a property). But many of us end up using it to smooth out our expenses and spend our future money now. And every time we do, it costs us, holding us back from getting ahead.
Debt needs to work for us!

What about debt consolidation?
Wrapping all your debts together and paying them off at once – ideally at a lower interest rate so you get out faster – can be helpful. But it can take longer to be rid of it. The key is to leave borrowing behind!

PROS
Rolling many debts into one single loan with a lower interest rate can often save you serious dosh. The weight becomes lighter in the short term, because you’re paying less interest on only one debt, and one payment is easier to budget for. Whew.
VS
CONS
Consolidation can lead you deeper into debt. Many times it just frees up more credit card space, so the danger is you could wind up using that credit and borrow even more.
The end goal has to be becoming debt-free. Wouldn’t it be a huge relief?

Tick your boxes

It's so satisfying. You can track your progress using your Sorted dashboard – add a task to your checklist, or set a goal with the amount you're aiming for.

List all your debts

Pick the one to pay off

Aim extra money at it

Pay off that debt

Rinse and repeat until debt-free!

VIEW MY DASHBOARD

Step 4

Cover your people, money, stuff
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Step 3

Tackle your debt

Wouldn’t it be an amazing feeling to be debt-free?

It’s a race to see how fast you can shed that debt.

Especially the high-interest stuff.

How much are you carrying?

Focus your extra money on one debt at a time.

SnowballPay off the smallest balance first

AvalanchePay off the highest interest rate first

WHAT ISTHE SNOWBALL?

WHAT IS THE AVALANCHE?

Get debt on your side

What about debt consolidation?

PROS

CONS

Tick your boxes

List all your debts

Pick the one to pay off

Aim extra money at it

Pay off that debt

Rinse and repeat until debt-free!

Step 4

Cover your people, money, stuff

Feeling stuck?

I am looking for…

Tackle
your debt

Especially the
high-interest stuff.

Snowball
Pay off the smallest balance first

Avalanche
Pay off the highest interest rate first

WHAT IS
THE SNOWBALL?

WHAT IS
THE AVALANCHE?