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Learn how to get out of debt with these three debt repayment strategies

Choosing the best debt repayment strategy for your circumstances can be the difference between years of credit card debt stress and tens of thousands of dollars.

One of the biggest challenges of coming up with a workable debt strategy is being able to see your financial situation clearly. This isn’t always possible when you’re dealing with credit card debt stress or even just juggling the week-to-week demands of living.

If you’re feeling overwhelmed and aren’t sure how to get out of debt, you’re not alone. In this article, we explore how to get out of debt and reduce credit card debt stress by choosing a strategy that suits your circumstances.

Causes of debt stress

As of October 2021, a Finder survey reported that there were over 13 million credit cards in circulation in Australia with an average balance of $2,715. This helps to explain why credit card stress is a leading cause of financial stress, but it’s not the only one.

Mortgage stress is also on the rise and household debt has doubled in relation to annual household income over the last 20 years, making Australians some of the most indebted people in the world.

The truth, however, is that any type and level of debt can cause stress. Personal debts, such as car loans, buy-now-pay-later debts, such as Afterpay and interest-free consumer loans, even informal loans from family and friends, can all be debts to lose sleep over.

If you’re coping with debt stress and aren’t sure how to get out of debt, read on. With a good strategy and the right budget, you’ll be back on your feet and saving in no time.

The three best debt repayment strategies

When it comes to how to get out of debt, planning and strategy is key. If you’re looking to reduce your credit card debt stress, you need a well-formulated plan that works for you. Budgeting is great, but if it doesn’t suit your lifestyle or goes too big too early on repayments, you’re much less likely to stick to it.

To help you find the best debt repayment strategy for your circumstances, there are commonly three different methods:

  • The ‘Avalanche Method’
  • The ‘Snowball Method’ and
  • The ‘Feel Good Method’.

The ‘Avalanche Method’

Logically, the quickest way to reduce your debt is to choose the best debt repayment strategy for you. The Avalanche Method means paying down the most expensive debts first (here are six steps to lower your credit card debt). These are the loans that attract the highest rates of interest. Credit cards are likely targets, as are store cards, revolving lines of credit and quick cash loans.

The Avalanche Method goes like this:

While meeting your commitments and making minimum payments on your other debts, focus all of your spare cash on paying down the debt that has the highest rate of interest. Once that debt is paid off, focus on the next most expensive one and so on.

Avalanche Method: Focus your spare cash on paying down the debts that have the highest rate of interest

This strategy is great for debt reduction because it minimises the amount of interest you pay over time. But the challenge of the Avalanche Method approach is that it can take a long time to feel like you’re making any progress. If your balance is sizeable, most of your payments will be taken up by interest charges. If you have serious credit card debt stress and you’re someone who needs to see progress quickly, this may not be the strategy for you.

The ‘Snowball Method’

Attacking your most expensive debt first is logical, but is it the most effective approach? Perhaps not always. But it’s worth acknowledging that money has an emotional component and that motivation is an important factor in sticking to whatever plan you come up with.

For people with a lot of debt, for example, the Avalanche Method could feel like the equivalent of going to the gym for months on end and never seeing any real progress. It would be easy to lose faith and slide back into old habits.

Snowball Method: Focus your spare cash on paying down your smallest debts first

After all, financial fitness is just like health and fitness, it requires long term habits that stick.

Money is the same. That’s why sometimes coping with debt stress is made easier by focusing on smaller debts first, even when they aren’t the most expensive ones. This is the best debt repayment strategy if you like getting ahead and experiencing the joy of progress.

This is called the Snowball Method and it goes like this:

While meeting your commitments and making minimum payments on your other debts, focus all of your spare cash on paying off your smallest debt first, regardless of the rate of interest it attracts. When that debt is paid off, move to the next biggest, and so on.

The Snowball Method gets its name because it gains momentum as smaller debts are paid off and the repayments are applied to larger debts. Along the way, you get to cut up credit cards, close accounts, celebrate milestones and ultimately, reduce your credit card debt stress.

The ‘Feel Good Method’

If you’re overwhelmed by how to get out of debt, it might be because there are a lot of emotions tied to repayments. Another often overlooked factor is how your debts make you feel.

Feel Good Method: Focus your spare cash on paying off the debt that will make you feel the best

Money can be highly emotional, especially when relationships are involved. Sometimes this means the best debt repayment strategy is to focus on paying off the debts that make you feel the worst. It might be $1,000 you owe your grandma or a credit contract on a phone you lost six months ago.

This is called the Feel Good Method and it goes like this:

While meeting your commitments and making minimum payments on your other debts, focus all of your spare cash on paying off the debt that will make you feel the best when it’s gone. When that debt is paid off, move to the next debt that will make you feel the best, and so on.


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If you’re struggling with coping with debt stress, this can be an excellent strategy. It helps you rebuild stressed relationships and feel better about yourself. After all, whatever your financial goals are, the end goal is not a physical destination or object, it’s a feeling – a feeling of freedom, security, calm, relief, and being free from money worries.

Meet Megan and Creagh, who found themselves deep in debt

Megan and Creagh are in their thirties, married, living in Sydney and both have steady jobs. By all accounts, they’re an average couple, except for the fact that they ended up with an above-average amount of credit card debt. The average Australian credit card balance is around $3,600, while Megan and Creagh’s cards added up to a heart-pounding $91,000.

We want to tell you Megan and Creagh’s story to show you that with a good strategy and a budget, anything’s possible. They weren’t sure how to get out of debt, but with a little help from MyBudget and the best debt repayment strategy for them, they’re living stress-free.

Stuck in an endless loop of interest-free credit cards

“It wasn’t big lavish expenses that got us into trouble – it was day-to-day stuff,” says Creagh.

The couple admits that they regularly overspent on little things – such as going out to eat instead of cooking at home – that added up to a lot over time.

And when their credit card balance got too high to handle, they took out new cards with zero-interest balance transfers, only to end up with multiple cards with multiple balances attracting high interest rates.

“What we were doing wasn’t working and we weren’t sure how to get out of debt,” says Megan.

How MyBudget helped them find the best debt repayment strategy

Coping with debt stress can cloud your judgment. In those circumstances, there are benefits in talking to a friend or independent person who can look at the situation for you.

Megan and Creagh decided to approach MyBudget. One of our Money Coaches went through their finances in detail and designed a customised plan that mapped out all of their income and expenses over the next 12 months. Both of them were surprised by how far their money could actually go.

(We can do this for you too! Book a free consultation today.)

Our help meant Megan and Creagh paid off $60k of debt in 10 months

Our plan ticked all of their boxes by taking into account the strategies mentioned above: those debts that were costing the most, those that could be paid off quickly and those that would feel great to get rid of.

Creagh says, “We told MyBudget what we wanted to try to keep a hold of and they built the plan around that.”

The best debt repayment strategy was one that meant they didn’t have to sacrifice their entire lifestyle to pay down their debts.

Megan and Creagh now have structure to work within. They still eat out regularly, but their spending now has limits and their income is organised into streams that take into account all of their future expenses and savings. By sticking to the plan they know exactly how and when they’ll achieve their financial goals.

A married female and male couple in their late thirties sitting next to each other, smiling at the camera

The result? Megan and Creagh have been able to pay off five credit cards in 10 months (about $60,000) and now have their sights set on a house deposit.

“I’m so proud of us and what we’ve done together, that’s a big deal for me. It’s a feeling of elation. I can breathe out,” says Megan with a smile.

Does this sound familiar?

If you’re coping with debt stress and aren’t sure how to get out of debt, we’ve here to help.

To enquire about a customised strategy that works for YOU, contact MyBudget today to request a free consultation.

Ready to find out more?

Call 1300 300 922 or get started today

This article has been prepared for information purposes only, and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

All customised budgets and consultations with money experts are subject to MyBudget’s qualification criteria. We recommend that you read and consider our Product Disclosure Statement.

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