It’s not uncommon for Australians to have at least one type of debt, be it a credit card, car loan, in growing instances a buy-now-pay-later facility and let’s not forget the biggest debt of all, held by nearly 3 million Australians, a mortgage.

Access to unsecured credit has made life easier and, in some cases, better for budget savvy consumers. But while there are many positives associated with using credit, there are also many downsides, especially for frivolous spenders.

It is easy to let your credit card balance creep up, and before you know it the bank offers to kindly increase your limit. Before you know where you are, you’re up to your eyeballs in debt and your cash flow is getting tighter.

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When debt starts to spiral, it’s imperative that you take decisive action if you’re to regain control. The first action must be to address your spending habits to ensure that the debt does not continue to climb at the same pace.

With a tighter grip on your spending, your main focus should be on reducing the debt levels on your credit card, as this is where you are likely to be paying the highest interest.

It can be tempting to take out another credit card with a lower rate, but be warned: if you don’t close down your existing cards, you’ll simply magnify the problem.

It is better to focus on reducing the outstanding amount, and that means saving more than you spend each month.

The most effective way to achieve this goal is to set a budget. This will help establish what your fixed costs are, such as your mortgage, school fees and utility bills. You can then look at what’s left and decide what expenses you can cut back on.

With a simple strategy in place, and a goal to strive for, you should see your situation begin to improve. And the lower your debts are, the less interest you’ll pay out each month – and the greater amount you’ll be paying off the debt itself.

There are instances, however, where it may be more effective to look at restructuring your debt in conjunction with implementing a budget.

If you decide to take this approach, make sure that you look for a loan that will offer you a far more competitive rate than a credit card.

One option is a personal loan but that is still likely to attract interest of around 9 to 14 per cent, or more.

The better option is to consolidate high interest debt into your home loan if there is sufficient equity in your property.

If consolidation and saving money is the answer, using your home loan to pay off a credit card can be an effective solution as the interest rate on a mortgage is significantly lower than a credit card.

When consolidating, the biggest mistake you can make is following a broker or bank lenders suggestion on ‘rolling’ all your debt in one easy repayment. Avoid this where possible unless it’s the only way you can access cheaper rates and service the debt.

I suggest that you take the consolidated debt as a secondary home loan over a shorter period of time rather than matching the home loan term. As taking a shorter term means that you would avoid paying unnecessary interest payment over the life of the mortgage.

Remember, as soon as you’ve tackled your credit card debt, reduce the maximum available limit, stick to using just one card and keep spending on track by staying with your budget.

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This article via does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.