How we managed to dig ourselves out of tens of thousands of dollars of debt

Eighteen months into a new relationship, Jaemarie Straatman realised just how big a debt her partner was carrying. This is how they went from the bombshell moment to buying a new house.

Jaemarie Straatman said she was “really frustrated” when she learned about 18 months into her relationship her partner had amassed a large sum of debt.

The 32-year-old and her now fiance Chris Peterson, 36, had applied for a home loan when his $60,000 debt came out in the wash.

“It wasn’t until we went to buy a house together that I got a full picture of his financial situation,” she said.

“He had multiple credit cards, personal loans and car loans, all of which he was just paying the minimum repayments on.”

Ms Straatman, who works as a financial planner, said they managed to consolidate the debts, reduce the amount owing and in 2017 purchased a three-bedroom home together.

Mr Peterson said that at the time he didn’t see his debts level “as a big deal”.

“I wasn’t looking at it responsibly and there was a bit of embarrassment,” he said.

“I was disappointed that it affected Jaemarie when we went to get a loan.”

Jaemarie Straatman, 32, and her fiancee Christopher Peterson, 36, worked together to try and wipe $60,000 in debts including credit cards and personal loans. Picture: Supplied.

MORE: Borrowers smash down their mortgage debts to record levels

MORE: Energy retailers dump pay-on-time discounts

A new Mortgage Choice study quizzed 1000 Australians and found one in three are embarrassed by their financial habits and one third try and hide they are in debt.

Mortgage Choice chief executive officer Susan Mitchell said the results also found one in four Australians spent more than they earned.

She said it was important people were honest about their financial situation, particularly when they were in a relationship.

“If you have a joint financial goal like buying a home, you have to fess up and say what’s going on or you won’t be able to get to that goal,” Ms Mitchell said.

“People often avoid it because they are concerned it will affect their relationship.”

The research found one in five people are taking their financial situation to the extreme and living secret financial lives.

“You often see lots of credit cards maxed out and then they get a personal loan to pay out the credit card,” Ms Mitchell said.

“It then becomes about just trying to juggle it and keep the payments going.”

Crown Money Management chief executive officer Scott Parry said it was not unusual for people to be embarrassed about their financial situation.

“People always compare themselves to the Joneses and as a result of that everyone wants to look like they are successful financially,” he said.

“People spend so much money they don’t have trying to impress people they don’t like.”

He urged those swimming in debt to pay off their consumer debt, consider a balance-transfer credit card with a zero per cent interest rate and look at debt options with cheaper interest rates.

“Start with your smallest debt and once that’s been paid off snowball that payment onto the next debt and you will actually make progress,” Mr Parry said.

@sophieelsworth

GET OUT OF DEBT

• Write down all your debts

• Get professional help if you need it

• Set a realistic budget

• Pay off the debts with the highest interest rates

• Consider debt consolidation

• Stick to paying with debit not credit

Originally published as How we managed to dig ourselves out of tens of thousands of dollars of debt