work out what you can afford to pay

Knowing what you can afford to pay is an important first step in getting your debt under control. Having this information handy will make the conversation and negotiation with your creditors much easier.

This information alone won’t solve your debt problem, but starting here helps you see where your money is going from week to week and also helps your creditor understand your finances.

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How to work out what you can afford to pay


Add up all your income

Make sure you include all sources of income including:

  • salary or wages
  • Centrelink or pensions
  • Family Tax Benefit and/or child support


Add up all your expenses

  • Be realistic. Most people underestimate how much they spend
  • Make sure you estimate enough for food (benchmark is around $130 per person per week)
  • You’ll also be surprised how much those odd things you don’t normally think about – such as  presents, haircuts and the kids’ lunch money – add up. Put them in too
  • Leave a little for a rainy day. 10% of your income is a benchmark, but even $5 is a start


If you’re spending more than:

  • 10% of your income on utility bills (water, electricity and gas); and
  • 30% of your income on rent or mortgage

you may not be able to pay your debts. Call us on 1800 007 007 to speak with one of our financial counsellors.



It’s much better to use a tool to help you work this out so you don’t forget anything. Try using MoneySmart’s Budget Planner.

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