When you’re drowning in debt, creating a budget might feel pointless or even impossible. But a solid, realistic budget is often the first step out of financial stress and toward stability. Whether you’re juggling multiple credit cards, personal loans, or overdue bills, the right budget can help you regain control and start moving forward.
Step 1: Know Where You Stand When You’re Drowning in Debt
Before you can create a plan, you need clarity on your financial situation. That means listing:
- Your total income (after tax)
- All expenses (fixed and variable)
- All debts (including interest rates and repayment terms)
You might be surprised how much you’re spending on things like subscriptions, takeaway food, or interest charges. Use bank statements or a budgeting app to review your last 1–2 months of spending. The Australian government’s MoneySmart website provides free budgeting tools and calculators to help track your expenses.
Step 2: Prioritise Your Essentials
Start by covering the basics:
- Rent or mortgage
- Utilities
- Food
- Transport
- Minimum debt repayments
If you’re drowning in debt and can’t cover essentials or meet your repayments, don’t wait, reach out to your lender or speak to a debt solutions expert. You can also contact a free financial counsellor for independent, confidential advice on managing debt. There may be options available like hardship assistance, debt consolidation, or informal payment arrangements.
At Australian Lending Centre, we’re here to help you explore the best path forward, judgment free.
Step 3: Eliminate or Reduce Non-Essentials
This doesn’t mean you have to cut out everything you enjoy. It just means being selective and intentional while you’re getting back on track.
- Cancel unused subscriptions
- Cook at home more often
- Limit online shopping
- Set a cap on entertainment spend
Even small changes can free up extra money to put toward debt.
Step 4: Choose a Budgeting Method That Works for You
There are a few proven methods:
- 50/30/20 Rule – 50% needs, 30% wants, 20% savings/debt
- Zero-Based Budgeting – every dollar is assigned a purpose
- Cash Envelope System – use physical cash to control spending
The “best” method is the one you’ll actually stick to start simple, and adjust as you go.
Step 5: Build in Emergency Buffer (Even If It’s Small)
Even if you’re in debt, having a small emergency fund (e.g. $500–$1,000) can stop you from relying on credit when life throws curveballs. Think of it as insurance for your budget, not a luxury.
Step 6: Consider Debt Consolidation or Professional Help
If juggling multiple repayments is causing stress, you might benefit from:
- A debt consolidation loan to roll multiple debts into one
- An informal payment arrangement through our debt management services
- A part 9 debt agreement, if suitable
- Speaking to a qualified finance professional for personalised support
You don’t need a perfect budget to get started. You just need a realistic one that reflects your current situation and keeps you moving forward.
At Australian Lending Centre, we help Australians find tailored solutions that make debt more manageable, without judgment.
It’s not about cutting everything out, it’s about creating structure and control so your money works for you, not against you.
Need Help With Your Debt?
If you’re struggling with repayments or unsure where to start, get in touch with our team today. At Australian Lending Centre, we’ve helped thousands of Aussies rebuild their financial future, with practical, judgment-free support.