Break the debt cycle

You don’t need a side hustle to take control of debt.

Start by finding money that’s already leaking away: unused subscriptions, habitual takeaways or a better deal on household bills. Redirect it straight to your debt so it doesn’t disappear elsewhere.

Take a look at your finances and set yourself a budget, so you know what you’re working with.

Seeing your numbers puts you back in charge. List:

• what you owe
• interest rates
• minimum repayments
• how long each debt will take to clear.

Sorted’s debt calculator can help pull everything together, visit sorted.org.nz.

There’s no best method — the best one is the one you’ll follow.

• Avalanche: pay off the highest interest first — saves the most money.
• Snowball: pay off the smallest debt first — faster wins, more motivation.
• Consolidation: combine debts to simplify with one lower interest rate.

Focus any extra money on one debt at a time and keep paying minimums on everything else.

A balance transfer on a credit card can help you repay debt from another bank’s credit or store card, by reducing the amount of interest you pay. Remember:

• You get a lower interest rate for a fixed period to help you put more money towards paying your debt, rather than interest.
• If you do not fully repay the balance within the fixed period, any remaining balance goes back to the standard purchase interest rate.
• You still need to meet your minimum monthly payment. Since the interest rate is lower, more money goes towards paying down the balance rather than interest.

Without a small buffer, debt creeps back in when life happens.

Start by building up to $1,000, then work towards three to six months of expenses. Decide what counts as an emergency before you need it, and stick to that definition.

Keep it separate from your spending and debt accounts.

Once you make progress, protect it:

• Spend only what you can repay.
• Save for big purchases.
• Keep Buy Now Pay Later to one purchase at a time.
• Avoid temptation by blocking your card or adding a gambling block.
• Close credit accounts where possible.

You’re designing a system where debt stops being the default.