Dealing with debt

Dealing with debt

Modern debt

Our relationship with money is as individual as it is complex. We would like to say that we don’t need money to have a good life but the fact is – unless we live totally self-sufficiently in the bush – we all need it.

Having money often determines where we live, study, and socialise as well as what we buy and what we do for fun. It can also affect how we perceive ourselves. When we don’t have enough money we have restricted choices and opportunities. Even when we have some money, we may want or need more. Often the solution is to borrow it in some form.

Sometimes this is ‘good’ debt that adds to our wealth in the long run, however it can quickly become ‘bad’ when our level of household expenses exceeds our income.

Studies have shown that nearly 25% of all households currently experience some form of financial stress. This includes having difficulty in meeting mortgage and credit card repayments, paying higher prices for utilities and insurance or finding funds for emergencies. Many have had to draw on personal savings or increase their debt simply to maintain their current situation.

The households under the most financial strain are not always those with the highest debt level. Instead they tend to be those with the highest ratio of debt and expenditure relative to their income.


What causes our debt?

Many factors influence how much money we owe.

External factors

  • Unexpected life events such as sickness, divorce or retrenchment
  • Economic downturn and increased interest rates
  • Poor or unethical lending practices that force people to borrow more than they can be reasonably expected to repay

Internal factors

  • Wanting to have things ‘now’ regardless of whether we can afford them
  • Buying things to maintain a perceived social status or to provide emotional comfort (such as clothes shopping after a relationship break-up)
  • Ignoring bills or neglecting to meet repayment terms
  • Making poor decisions or not following a practical budget


What are the effects of debt?

Being under financial stress can put a strain on your relationship with family and friends or you may make different lifestyle choices than those you prefer. For example, you may need to move to a smaller home, cut back on groceries or give up some insurance.

Debt stress can also affect your work. Anxiety may make it harder to focus or stay productive. You may even settle for a lower-paid job that is available rather than hold out for one that fits with your career goals.

All of this can affect mental health and provoke behaviours and emotions such as:


Sometimes when financial stress becomes overwhelming it can be easier to deny there is a problem and continue spending as normal. It may take a drastic event like pending bankruptcy before you face up to it.

Anxiety and panic

Worrying about money can be quite consuming. It can affect your sleep and eating habits leading to health

issues or cause irrational behaviour that affects your everyday life.


Not being able to provide for others as you used to can cause strong feelings of guilt, even if you weren’t to blame.


Anger is a common reaction to financial stress. You might become irritable and snap at those around you. You could be angry with yourself or may develop a deep-seated rage against your creditors regardless of who caused the situation. In extreme cases this anger may take the form of violence.


Some people try to regain their finances through gambling or taking extreme financial risks. Others seek comfort in smoking, alcohol or other addictive habits. The buzz they get may make them feel better for a little while but then they may need to indulge for longer periods or in greater quantities to get the same effect. This usually leads to more problems in the long term.

Low self-esteem or self-confidence

Having a drop in income or increased debt can dramatically affect how we feel about ourselves. We may no longer trust our ability to make sound decisions. We may also feel embarrassed by our perceived stupidity or drop in social status.


Feelings of inadequacy can cause us to become withdrawn or powerless. Having no hope for the future may even lead to suicide.


Making positive changes

If your finances are causing you to be stressed the first thing to do is acknowledge the problem and gather all your facts and figures. Approach those you owe money to and ask if they can re-consider your terms. Create a budget and stick to it. Numerous websites and phone apps have been developed to make this much easier including Money Smart (set up by the Australian Government).

Speak to your bank manager or a financial counsellor for sound advice. There are many organisations that can give you practical help with your finances and with day-to-day living. A number of them offer free services to those in need.


How can debt counselling help?

Financial counselling and debt management services can certainly help on a practical level but many are unable or unequipped to offer much emotional support.

Trained debt counsellors can help you to see the situation as a whole and give perspective to your feelings. You will normally be given plenty of time over a number of sessions to discuss and reflect on the various social and cultural factors that may have influenced your situation and your beliefs about money in general.

Together you can explore the repercussions the situation has had on your health, relationships and lifestyle. Your counsellor will work with you to break negative habits and find new ways to cope when things become overwhelming. They can help you deal with your anger, improve your self-confidence and see that your situation can be overcome with careful planning and the right support.

Talking to friends and family may help but having the support and guidance of a professional counsellor is usually more beneficial. Therapy sessions are confidential and non-judgemental. Seeking help early gives you a greater chance of improving your situation and getting your life back to normal.


Where to find help

Our directory lists hundreds of counsellors who specialise in debt management and debt counselling. Enter your postcode or suburb into our search box to see a comprehensive list of professionals near you.

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