One of Australia’s leading financial planners has a direct warning for households struggling with mortgages, credit cards and rising living costs: ignoring your debt could be costing you far more than you realise.
Financial planner Stuart Wilkinson - who is the Director of Sonder Advisory Group - says Australian families should stop thinking about debt simply as a monthly repayment and start looking at the true cost of what they owe.
His first piece of advice is surprisingly simple: write everything down.
“Most people can tell you roughly what their mortgage is but ask them exactly what they owe across the mortgage, credit cards, car loans, buy now pay later and other debts and the picture gets much less clear,” Wilkinson said.
“You can’t build a strategy around a number you don’t know.”
Wilkinson says it can be uncomfortable, but that is precisely why it matters.
The number you may not want to see
For some families, debt has accumulated gradually.
A mortgage here, then a car loan, then the credit card used for an unexpected expense.
Throw in a few buy now pay later purchases - and it gets scary.
Individually, each repayment can seem manageable. Together, they can put enormous pressure on a household budget.
“One of the biggest mistakes people make is looking at every debt separately,” Wilkinson said.
“They think, ‘That payment is only $200’ or ‘That card is only a few thousand dollars’.
“What matters is what all of those commitments are doing to your household every single month.”
His advice is to put every debt on one page. Then write beside it the interest rate, minimum repayment and any fees.
“That piece of paper can tell you more about your financial position than almost anything else,” he said.
Find out where your money actually goes
Once Australians know what they owe, Wilkinson says the next step is looking at their cash flow.
That means comparing every dollar coming into the household with what is going out.
Wilkinson says people are often surprised by the result.
At his business, Sonder Advisory Group - which is is a financial planning firm helping individuals and families build personal strategies around debt, cash flow, super and wealth - he has seen it all.
“A lot of families genuinely feel like there should be money left at the end of the month, but somehow there isn’t,” he said.
“That’s when you need to stop guessing and look at the numbers.”
He says this isn’t about cancelling every coffee or removing everything enjoyable from family life.
It is about separating what genuinely matters from spending that has simply become habitual.
“A budget that makes you miserable for three weeks and then gets abandoned isn’t a good budget,” Wilkinson said.
“You want something realistic enough that you’ll still be following it six months from now.”
Not all debt should be treated equally
Wilkinson says another common mistake is throwing extra money at debt without considering what that debt is costing.
For households able to make additional repayments after covering essential expenses, one commonly recommended approach is to maintain required payments across debts while directing extra money toward the debt charging the highest interest and fees.
“People love the psychological feeling of wiping out a small debt, and there can absolutely be value in momentum,” Wilkinson said.
“But purely from a dollars-and-cents perspective, you also need to look at which debt is doing the most damage.”
A high-interest credit card balance, for example, can behave very differently from a home loan carrying a much lower interest rate.
“The question should be: what is this debt actually costing me to keep?” Wilkinson said.
“That changes the conversation completely.”
The bills you cannot ignore
But Wilkinson warns Australians against becoming so focused on paying down debt that they fall behind on essential household costs.
“If things are getting tight, silence is usually the worst strategy,” Wilkinson said.
“Pick up the phone before you miss three payments, not after.”
“And don’t assume asking for help means you’ve failed financially. The earlier you deal with a problem, the more options you generally have.”
Beware the ‘easy fix’
Wilkinson also cautions families against solving one debt problem by immediately creating another.
That could mean increasing a credit card limit, taking out short-term expensive credit or consolidating several debts without properly examining the new loan.
“Making five debts disappear from your banking app and replacing them with one loan might feel like progress,” Wilkinson said.
“But if you’re paying more interest or stretching that debt over another seven years, you haven’t necessarily fixed anything.”
“The repayment being smaller doesn’t automatically mean the deal is better.”
His warning for Australian families
Wilkinson says the biggest danger isn’t necessarily having debt.
For most Australian households, particularly homeowners, some debt will be a normal part of their financial lives.
The danger is having no strategy for it.
“You don’t need to wake up tomorrow and suddenly be debt-free,” he said.
“But you should know exactly what you owe, what it costs you and what your plan is to make that number smaller.”
“And if you haven’t looked properly at your debt for a year or two, make this the weekend you do it.”
Because while Australians cannot control every interest-rate decision or cost-of-living increase, Wilkinson says they can control how clearly they understand their own finances.
“The families who make the biggest progress aren’t necessarily the ones earning the most,” he said.
“They’re often the ones who finally decide: we’re going to know where every dollar is going, we’re going to have a plan, and we’re going to stick to it.”
This story contains general information only and should not be considered personal financial advice. Individual circumstances vary and consumers should consider professional advice appropriate to their circumstances. Australians experiencing financial difficulty can also access free financial counselling through the National Debt Helpline.
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