3 Step Plan - Debt Consolidation and Structuring

In this document, you’ll learn:

How to get free, professional help from a broker who’s seen it all, without judgement or stress.

How to reduce your average interest rate and save $442 every month.

How to simplify your debts while paying the banks $228,000 less in interest and genuinely paying off your debt 7 years earlier.

Over 5.8 million Australians are now struggling with home loan debt, and other debts like car loans, personal loans and credit card debt. Let’s be honest, the past few years have not been easy as interest rates have soared and cost of living has continued to rise - without signs of slowing down.

I understand how juggling multiple debts can not just be a financial burden, but can lead to emotional stress and in some cases relationship difficulties.

This is actually very common today in Australia and believe me I’ve almost seen it all at this point.

1. Overwhelming Financial Complexity

●Managing multiple debts with varying interest rates, due dates, and payment amounts feels chaotic and stressful.

●Lack of clarity about how much they owe in total or the actual progress they’re making on repayment.

●Fact: A significant number of Australians hold various forms of debt, including mortgages, credit cards, and personal loans, contributing to financial complexity. (Australia)

2. High Monthly Repayments

●Struggling to meet monthly repayment obligations due to rising interest rates and increased living costs.

●Feeling like they’re only just covering the minimum payments, which doesn’t reduce their debt effectively.

●Fact: Almost half of Australian adults with debt—equivalent to 5.8 million people—are struggling to make repayments. (The Guardian)

3. Emotional Strain

●Experiencing feelings of shame, guilt, or embarrassment about their financial situation, which prevents them from seeking help.

●Anxiety about the possibility of missed payments, further financial penalties, or negative credit score impacts.

●Fact: Anxiety and stress caused by financial hardship (51%), feelings of shame or embarrassment (40%), and feelings of failure (40%) are common among those struggling with debt. (ASIC Home | ASIC)

4. Rising Interest Costs

●Credit card and personal loan interest rates are significantly higher than their mortgage rate, compounding the financial burden.

●Uncertainty about how rising mortgage rates will affect their ability to repay consolidated debt.

●Fact: The Reserve Bank of Australia has noted that pressures from high inflation and restrictive monetary policy continue to be felt across the Australian community, affecting borrowers' ability to manage loan repayments. (Reserve Bank of Australia)

5. Lack of a Clear Plan

●Feeling lost without a structured roadmap to become debt-free.

●Struggling to identify practical strategies to simplify their repayments and save money in the long term.

●Fact: Financial stress increases the risk of homelessness and can negatively impact an individual’s health and psychological well-being. Higher financial literacy is linked with lower financial stress, indicating a need for better financial planning. (Department of Education)

6. Risk of Default

●Constantly worrying about missing payments, which could lead to default, penalties, or even legal action.

●Fearing potential loss of their home if mortgage payments become unmanageable.

●Fact: Housing loan arrears have risen steadily from the low levels of late 2022, with highly leveraged borrowers most likely to fall into arrears. (Reserve Bank of Australia)

7. Diminished Quality of Life

●Sacrificing discretionary spending, family outings, or hobbies to keep up with repayments, leading to resentment or dissatisfaction.

●Feeling trapped in a cycle of financial survival without being able to enjoy life.

●Fact: More than one in 10 Australians reported experiencing three or more kinds of financial stress, affecting their quality of life. (Australian Institute of Family Studies)

8. Limited Savings or Emergency Funds

●Unable to build or maintain an emergency fund due to debt obligations.

●Worrying about unexpected expenses (e.g., car repairs, medical bills) derailing their financial stability.

●Fact: A recent survey found that 46% of respondents named financial pressure as a key factor in their distress, indicating limited savings or emergency funds. (Beyond Blue)

9. Misalignment of Financial Goals

●Struggling to focus on longer-term goals like saving for retirement or children’s education because of immediate debt concerns.

●Feeling like they’re falling behind peers or societal expectations of financial security.

●Fact: Financial stress can lead to a misalignment of financial goals, as individuals struggle to manage immediate debt concerns over long-term objectives. (Department of Education)

10. Inertia or Avoidance

●Procrastinating on seeking professional help or exploring solutions due to feelings of helplessness or overwhelm.

●Ignoring bills or avoiding reviewing their finances, leading to missed opportunities to improve their situation.

●Fact: Despite struggling with debt, many Australians do not seek help due to feelings of shame or embarrassment, exacerbating their financial situation. (ASIC Home | ASIC)

Fortunately, there are options even when interest rates are not dropping…

Our 3-step plan for Aussies who want to simplify their finances, regain control of their debt, save or even pay off their loans sooner.

Step 1 - Take ownership of the current situation

Hopefully the information I shared above lets you know that you are not the only one in this situation and that you do not have to have feelings of anxiety or shame around your current situation.

The worst thing you can do is ignore the situation - the first step is to take responsibility and ownership so that you will take action to improve your situation.

Step 2 - Simplify debts & reduce interest

If you are employed and have equity in your home, simplifying your debts into a single repayment at a lower home loan rate (called debt consolidation) is a good way to reduce the amount of interest you have to repay because it lowers your overall average interest rate.

For example, if you had a home loan ($598k), a car loan ($55k) and some credit card debt ($8k), you could potentially save $442 per month by simplifying the loans into a single home loan at a lower average interest rate!

This assumes average Australian home loan - $598,624 and average Australian household income - $92,040. (Source: ABS)

Step 3 - Restructure your single loan to save & repay earlier

Now that you’re paying the bank the minimum amount of interest possible, you may have freed up some cash every month.

This is great and you could save this…

But did you know that on an average $598k loan the borrower will in fact not just pay back the $598k, but $745k in interest repayments as well!

That’s like buying your house and buying the bank a house!!

So what we like to do instead is redirect that saved interest every month and pay down the principal sooner. Because when that happens you end up paying less overall interest.

Using our example from above, if we re-directed that saved cash back into paying off the principal, you’d save $228,000 over the life of the loan and actually pay it off 7 years earlier!

This is massive, as most Aussies just think they have to pay the minimum and wear these “mortgage handcuffs” the bank puts them in.

Hopefully you’ve found this information helpful - you can even go to your current bank with the 3-step plan above and request further assistance.

If you would prefer a little more guidance and for someone to show you options across a variety of banks and lenders, not just one, I am available to help you.

Please feel free to get in touch with me using whichever method you prefer:

Kath Hack Principal Broker | Albany Creek Email: kath@mymortgagehacks.com.au Call / SMS Me: 0417 601 803

We are located in Albany Creek, Qld. ABN 77665786130. ACL 384704. Credit Rep #551274.