5 tips for paying off ATO debt

5 tips for paying off ATO debt

According to finder.com.au, the average Aussie household is approximately $250,000 in debt (as of 2016). On top of this, the Australian Taxation Office (ATO) is owed $35.3 billion in overdue debts from the Australian public (2013-14 data).

What many Australians don’t realise is that there are methods of managing debt, which can help alleviate the burden and help you to pay it off more efficiently.

Here are our top 5 tips for paying off ATO debt, mortgage debt and other debt too.

1. Know what you owe

Okay, our first tip may sound simple, but it’s where many people slip up. Create an Excel spread sheet, bring out an old-fashioned pen and paper, and list all of the debts you currently owe.

Include the source of the debt, the amount owing and the interest currently payable. Consider your credit cards, HELP or outstanding school debt, mortgage, vehicle repayments, personal loans, and anything else you owe.

2. Prioritise

Now you have your list, order it according to what debt is the most pressing. If you have a mortgage this should probably come first. Then, order the debt according to what has the highest interest and the most left to repay. 

This will help you to prioritise which debt should be paid off first. It will also help you feel less overwhelmed, as you’ll have broken down what needs to be paid ASAP, and what can wait a little longer.

3. Consolidate

It is possible that you’re paying more interest than you need to on particular debts. We recommend reviewing your outstanding debts, and researching whether there are more suitable repayment opportunities available for you.

A good mortgage broker will review your debts, and look to see if there is a more appropriate loan solution. This could mean consolidating all or some of your debts into one bundle, and then paying them off using a loan with lower interest.

4. Speak with your debtor

If you are experiencing difficulty paying off a debt, it can often be useful to speak with the debtor directly. The ATO is known for extending repayment periods if you let them know you need more time.

Of course, this is assessed on a case-by-case basis, but many debtors appreciate hearing from you before you start defaulting on payments, and will extend some leniency. So, pick up the phone and explain your situation. 

5. Budget

Yes, this is the boring one most people don’t want to hear about! But, there are some cool budgeting apps, like Pocketbook, that help you to budget effectively, and actually make the process kind of fun.

Knowing what’s coming in and what you will need to spend on your weekly or monthly repayments will alleviate your stress ten-fold. At first it may seem like a hassle to work out your expenditure, but you will feel empowered as a result.

Need to consolidate debt?

Contact us about securing a personal loan to consolidate your existing debt. We research and tailor a loan to suit your goals, and make sure your new loan works for your entire life circumstances.

Our goal is to make your life easier, by connecting you with finance that serves you better. Get started now. 

Financial Advice Disclaimer:This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.