Special Report by MoneyFormula
The Australian Homeowner's Survival Guide: How to Beat Financial Stress in 2026!
With interest rates shifting and cost-of-living rising, this comprehensive guide provides a step-by-step roadmap for Australian mortgage holders to regain control.
Last Updated: 01 February 2026
Published By: MoneyFormula / HomeMoneyManager - proudly helping Australian homeowners for 20+ years with innovative software solutions to tackle the cost of living, crush home loans, and reduce financial stress. Copyright © MoneyFormula.com.au - All Rights Reserved.
It's 2:00 AM. You're lying in bed, staring at the ceiling, with the same questions going through your head:
"How will I cover this month's mortgage payment and still buy groceries? What will I do when the next interest rate rise hits my mortgage repayments? When can I next afford a holiday or even to treat myself?"
The anxiety is real. The stress is crushing. And you feel completely alone.
But here's the truth: it's not just you. According to recent Roy Morgan research, 1.29 million Australian mortgage holders - roughly 1 in 4 - are currently classified as "At Risk" of mortgage stress.
That's over a million families lying awake at night.
This practical and comprehensive survival guide for Australian homeowners shows you how to tackle financial stress in 2026.
Based on 20+ years of experience, we'll walk through strategies that work, the simple maths behind them, the psychological pitfalls, and most importantly—a clear path forward without sacrificing all the fun.
Table of Contents
Chapter 1: Understanding Financial Stress in 2026
As Australian homeowners we are facing a unique combination of economic pressures in 2026:
1.
Inflation sitting at 3.4% after climbing back from previous lows
2.
Interest rates that have risen dramatically from the historic lows of 2020-2021
3.
Cost of living increases constantly hitting groceries, utilities, insurance, and fuel
4.
Wage growth failing to keep pace with expenses
According to the Australian Bureau of Statistics (ABS), the average Australian household is spending 18-20% more on essential goods than they were two years ago. Meanwhile, the Reserve Bank of Australia (RBA) is looking to increase rates again as inflation runs too high.
It’s a double whammy, everything is already too expensive, but the only fix the experts can come up with is to slug homeowners with a mortgage interest rate rise at a time when we can least afford it. Seems crazy to me!
Why This Time Feels Different
As a homeowner in 2026, you've likely experienced something previous generations didn't: the shock of going from 2% to 3% mortgage rates to 6%+ in just a couple of years.
The major banks, Commonwealth Bank (CBA), Westpac, NAB, and ANZ, have all raised rates in line with the RBA's cash rate increases, passing on the increases as quickly as possible.
For someone with a $700,000 mortgage, the difference in repayments between a 2.5% rate and a 6.5% rate is approximately $1,800 more per month. That's $21,600 extra per year you have to find, after income tax, and the endless number of ever increasing bills.
No wonder we are all stressed.
Other Impacts of Financial Stress
But, financial stress isn't just about numbers, it affects our mental health, our relationships, our sleep, and our physical wellbeing.
Common symptoms include:
1.
Lying awake at night worrying about money
2.
Avoiding checking your bank balance
3.
Arguments with your partner about spending
4.
Shame or embarrassment about your situation
5.
Decision paralysis (too overwhelmed to take action)
It's Not You - It's the System
The Australian Securities and Investments Commission (ASIC) recognises financial stress as a serious issue affecting millions of Australians.
But here's what they don't tell you: financial stress is largely due to the rigged system we have in Australia, not your personal failure.
Your mortgage repayments maximise bank profits - The Australian banking system is designed to maximise profit. That's not a conspiracy theory, it's literally how banks operate as businesses to keep the shareholders happy.
Here are the facts:
1.
Banks structure minimum payments to keep you in debt as long as possible
2.
The default 30-year mortgage term means you pay back more than double what you borrowed
3.
Credit card interest rates hover around 20% while savings accounts pay 4-5%
4.
"Loyalty" often means paying more than new customers.
5.
Banks manage to pass on interest rate rises instantly, but delay passing on rate cuts
Supermarkets make you spend more - Ever noticed the milk is always at the back? That's deliberate. The layout, the specials, the "buy now pay later" – it's all designed to take your money. And it works, doesn't it?
The cost of living keeps climbing faster than wages - Electricity, fuel, insurance, rates – everything climbs faster than wages. Most of us now spend more than we earn just maintaining a basic lifestyle. Every. Single. Month.
When you understand that the system is working exactly as designed - to extract maximum interest and get you to spend as much as possible - you will see that you are not bad with money. You're playing a rigged game against experts in their fields.
You need someone to help you in your corner, to highlight what is going on, and give you a chance to win one back.
So let's start with the most pressing problem.
Chapter 2: How to Survive the Next Interest Rate Rise!
The Reserve Bank of Australia (RBA) is signalling potential rate rises in 2026, with economists predicting increases could come as early as the first quarter.
For Australian mortgage holders, this means one thing: higher repayments are likely on the way.
The Impact of a Rate Rise on Your Mortgage
As a quick summary, here's what a rate increase looks like on a 30-year mortgage (approximate monthly increases):
Loan Balance
+0.25% Rise
+0.50% Rise
$400,000
+$60/month
+$120/month
$600,000
+$90/month
+$180/month
$800,000
+$120/month
+$240/month
While the above estimates are a good start, what's important is to know how much your actual repayments will go up with a 0.25% or 0.50% rate rise, so you can start to plan for it.
Unfortunately most Australian homeowners don't know their number, and when the next rate rise is announced, and the bank increases your repayments, it's too late. You're reacting in panic mode instead of planning ahead.
Prepare Now, Not After
Don't wait until the next rate rise is announced.
Calculate Your Impact Today
It's really important to know how much your repayments will go up by, as this is the actual amount of money you will need to find each month.
Your actual increase will be different based on your current balance, loan term remaining, current interest rate, and any offset or redraw balance you may have. That's why you need to calculate YOUR specific situation.
Review Your Budget
Once you have the number, take a look at your budget and work out where will that extra $90, $120, or $240 per month come from? Find it now while you have time to adjust.
Review Your Spending
Review your last three months of spending and see if there are any additional subscriptions, waste, or expenses you could cut out if you need to. Start identifying where the $50 to $100 per month now could make all the difference.
Build an Offset Buffer
If you make the change today and have an offset account, try to build it up now. Every dollar in there reduces your interest charges and helps cushion the blow of a rate rise.
The difference between financial stress and financial control is often just preparation. Knowing your number, finding the gap in your budget, and adjusting before the rise hits puts you in the driver's seat.
TIP: MoneyFormula's mortgage calculator lets you model exactly what a 0.25% or 0.50% rate rise will do to YOUR repayments based on your current loan balance and term remaining. Discover exactly what the bank will charge you before the rates rise.
TIP: Once you know the impact, MoneyFormula's budget and spending review tools will help you find that money in your recent spending, whether it's $60, $120, or $240 per month you need to cover.
Chapter 3: Crush Bad Debt - Simply Pick Your Strategy
Mortgage stress is rarely just about the mortgage. It's usually the mortgage PLUS credit cards PLUS personal loans PLUS Buy Now Pay Later (BNPL) PLUS car loans.
The Minimum Payment Trap
Credit card interest rates in 2026 are averaging 20% to 22% with some store cards charging 25%+, and the bank structures your minimum payment to approximately 2% to 3% of the balance or $25, whichever is higher.
In the following example, on a $5,000 balance at 22% interest, the numbers look like this:
$100 required as minimum payment
$92 goes to interest and bank profits
$8 goes to principal and paying back debt
$100 required as minimum payment
$92 goes to interest and bank profits
$8 goes to principal and paying back debt
Despite paying $100 to the bank they only reduced your debt by $8. The bank keeps the other $92 for interest and profits.
With this minimum repayment the bank sets, you're on a 30-year treadmill where you will pay back over $8,000 in interest and a total of over $13,000 back to the bank.
Meanwhile, your mortgage is costing you 6 to 7%. Mathematically, every dollar you put toward a 22% credit card debt saves you more than three times what you'd save paying extra on your mortgage. So crushing your bad debt is a really important first step.
Three Debt Repayment Strategies
The simple trick is to pay a little extra towards your bad debts, which will make a huge difference. There are three debt strategies you can use to help decide in which order to pay off your debts, and therefore which one gets the extra repayments first.
1. Smallest Balance First (Snowball)
With the snowball strategy, you pick the debt with the smallest balance first, regardless of interest rate. If you have lots of small debts, the snowball method can be a game-changer. The quick wins as you pay down debts can be incredibly motivating and help build momentum.
2. Largest Interest Rate First (Avalanche)
With the Avalanche strategy, you focus on the debt with the highest interest rate first. This can save you money in the long run as you are getting rid of your most expensive debts first.
3. The Custom Strategy (Emotional)
Sometimes, the most "emotional" debt is the one to tackle first. If there's a particular debt that's causing you a lot of stress, getting rid of it can be a huge relief, even if it's not the mathematically "best" choice.
Prioritise Debt Minimum Payments
Remember, as you tackle your debts, it is important to keep paying the minimum repayment to all of your debt (so that you don't impact your credit rating).
The debt strategy you choose above, only applies to extra money you want to put towards the debt you want to target first.
Rolling the Minimum Payment
Here's where debt repayment gets powerful: when you pay off one debt, don't spend that minimum payment. Roll it into the next debt.
Example
Credit Card 1: $50 minimum
Credit Card 2: $30 minimum
Personal Loan: $200 minimum
You're currently paying $280 in minimum repayments a month.
Credit Card 1: $50 minimum
Credit Card 2: $30 minimum
Personal Loan: $200 minimum
You're currently paying $280 in minimum repayments a month.
When you pay off Credit Card 1, you now have $50 "available." Instead of spending it, add it to Credit Card 2's payment.
Now you're paying $80 ($50 + $30) towards Credit Card 2. When that's paid off, you have $80 to add to the Personal Loan, now paying $280 ($50 + $30 + $200) towards it.
This accelerates debt payoff dramatically and it's one of the most effective strategies for reducing financial stress.
So, target your first debt, pay it off as quickly as possible, then start using the minimum payment to turbo charge paying down your other debts.
TIP - MoneyFormula gives you all the tools you need to follow the steps above. It will line up your debts and see exactly when you will pay each one off and when you will be debt free. You can test the different debt strategies (snowball, avalanche and custom) and discover which one works best for you. Play with rolling the minimum balances, lock it in and make it happen.
Chapter 4: Stop the Money Leaks Draining Your Budget
Financial stress is often blamed on the big expenses (the mortgage, the car repayments), but behind the scenes the small expenses could be adding up to thousands of wasted dollars per year.
The Hidden Expense Reality
Most Australians dramatically underestimate how much they spend on "small" purchases. Research from the ABS shows that Australian households leak an average of $150 to $300 per week through one or more of the following:
Convenience Purchases
Those small repeating expenses that do real damage to your budget, with examples including:
1.
Morning coffee: $5 a day = $1,825 a year
2.
Takeaway lunch 3 x week: $45 a week = $2,340 a year
3.
Emergency grocery runs at expensive convenience stores
4.
Uber Eats because you didn't plan dinner: $60 an order
The "Just One Thing" Purchase
You go to Kmart for school shoes. You leave with shoes, towels, storage containers, and random items from the $2 section. That extra $40 to 60 per trip adds up to $2,000 to 3,000 per year.
Kids' Activity Creep
Swimming, soccer, piano, dance, tutoring, school excursions, fundraisers. Each seems reasonable individually, but Australian parents easily spend $200 to 400 per month per child on activities and school extras. That's $2,400 to $4,800 per year per child.
The Standby Power Drain
Devices on standby (TVs, gaming consoles, phone chargers, microwave, etc.) can cost Australian households $100 to $200 per year in wasted electricity. Combined with other energy waste, families can save $300 to $500 annually just by being more conscious.
Bank Fees You've Forgotten
Account keeping fees, ATM fees, credit card annual fees (or monthly fees disguised as "no annual fee" cards), international transaction fees. The average Australian pays $120 to $240 per year in bank fees they barely notice.
So What Should You Do?
The first step is to get a rough idea of where your money's going. A quick guess is fine.
Write Down Your Income & Expenses
Think about all your regular expenses: rent or mortgage, groceries, transport, entertainment, bills, debt repayments, etc. Jot down an estimated amount for each.
Also make a note of your income sources: salary, side hustles, government benefits, investment income and any other income.
This first step is important, because (1) you should be able to see if you are spending more than you are earning (a huge red flag) (2) you will have to actually think about where your money goes, so it becomes real, (3) you have a starting point and can find out how accurate you are.
Do a Quick Spending Review
Next, go back over the past few months of expenses from your accounts to find out exactly where your money went.
As you review your account transactions, adjust your budget for anything you missed; or adjust the amounts where you were just plain wrong (which happens!).
Why Budget and Spending Review?
Most people create a budget (what you think you'll spend) but never review their actual spending (what you really spent). This gap between intention and reality is where financial stress lives.
A budget is your plan. A spending review is your reality check. You need both.
When you compare them side-by-side, you discover the truth about where your money actually goes. Maybe you budgeted $50 a week for coffee and lunches, but you actually spent $120 a week. That $70 a week difference is $3,640 per year—money that could have gone to your mortgage or other goals.
With a simple budget and a spending review in place you have a great starting position to take control of your finances, and reduce financial stress.
TIP - MoneyFormula provides all the tools you need to create a simple budget, review your last three months (or more) of spending, and easily compare the two. It comes with a full set of Australian spending categories to get you started, or you can easily customise them to suit your needs.
Chapter 5: Mortgage Insider Secrets You Need to Know
Your mortgage feels like it's never going down. Every month you pay on time, but the balance barely moves. And you know the bank's loving it.
You're Paying Way More Than You Should Be
Banks structure your repayments to maximise the interest over 30 years. The longer you take, the more profit they make - and banks love their profits!
Quick Quiz
[1] Did you know, you will pay back over 2 times the amount you borrow if you don't make extra repayments?
For example, borrow $700,000 at 6.0% and over 30 years you will repay over $1,500,000 back to the bank.
[2] Did you know, after 22 years of repaying your mortgage you will still owe the bank over 1/2 the original amount you borrowed?
For example, on the same $700,000 loan, despite paying back over $1,000,000 in the first 22 years you will still owe the bank over $350,000. The bank kept over 70% of the first million dollars you repaid to cover interest and profits.
Now, this is not because you have to pay this much — it's because that's how the system is designed and few of us question it.
[3] Did you know, making small extra repayments each month will save you thousands of dollars and cut years off your mortgage?
For example, on the above mortgage, paying an extra $250 a month, will save you over $131,744 in interest and you will be debt free 4 years and 7 months sooner.
The Fortnightly Payment Trick
Here's one of the most powerful concepts in Australian mortgage management, and one of the simplest ways to make extra repayments (which is why it has been around for years).
If your monthly payment is $4,000, and you switch to fortnightly payments of $2,000, you make an extra payment in the year without even noticing it.
Comparison
Monthly: 12 months × $4,000 = $48,000 per year
Fortnightly: 26 fortnights × $2,000 = $52,000 per year
Monthly: 12 months × $4,000 = $48,000 per year
Fortnightly: 26 fortnights × $2,000 = $52,000 per year
There are 12 months in a year, but there are 26 fortnights. By paying fortnightly, you're making 13 monthly payments per year instead of 12. That extra $4,000 per year goes straight to your principal, not interest.
So, the fortnightly repayment trick works, not because you are making "fortnightly payments", but because you are making extra repayments into your mortgage over the year than if you just stick with the bank's monthly repayment amount.
But the great thing is, when you pay $2,000 a fortnight, it "feels" the same as paying $4,000 a month, so you don't really notice it, but as we've seen above you put an extra $4,000 a year into your mortgage (which is over $330 a month). It is popular as it is so easy to do, and it really works.
This isn't a trick or a hack. It's just mathematics. You're making one extra monthly payment per year, and because every dollar that hits your principal reduces future interest charges, the compound effect is massive.
The Bank's Fortnightly Trap
A word of warning - if you ask your bank for their "official" fortnightly repayment amount or you use an online calculator, you might NOT get the right number.
Their calculation normally factors in the 26 fortnights and it adjusts the amount downwards, so instead of 1/2 the monthly amount, they give you a true fortnightly payment and you make no extra payments in the year.
Sneaky, right?
The Offset Account Power
If you have an offset account linked to your mortgage, it is good to make sure you understand how it works so you can maximise your savings.
Money in your offset reduces your daily interest calculation, because the bank reduces your mortgage balance by the offset balance before they calculate your interest.
Example
Mortgage balance: $500,000
Offset balance: $20,000
Interest charged on: $480,000
Mortgage balance: $500,000
Offset balance: $20,000
Interest charged on: $480,000
If your mortgage rate is 6.5%, that $20,000 sitting in offset saves you approximately $1,300 per year in interest. And unlike a savings account where you pay tax on interest earned, this saving is tax-free.
Compare this to putting the $20,000 into a savings account paying 4.5% interest:
You earn $900 interest on $20,000
You pay tax (assuming 30% marginal rate): $270
Net benefit: $630 ($900 - $270)
You earn $900 interest on $20,000
You pay tax (assuming 30% marginal rate): $270
Net benefit: $630 ($900 - $270)
Which shows in this example, the $1,300 tax-free interest saved using your offset account, is double that than money put in a taxable savings account.
TIP - MoneyFormula includes the Mortgage Tracker with all the tools you need to plan and manage your mortgage, including the "Fortnightly / Weekly Report" so you don't get caught out, the "Extra Payments Report" so you can see exactly how much you can save, and the "Offset Benefit Report" so you can check how much an offset account is worth to you.
TIP - The MoneyFormula Mortgage Tracker also includes the Interest Checker and Refund Report so that you can check the interest calculations on your mortgage are correct and instantly calculate the refund you are due, and it has full goal management system so you can lock in your mortgage free date and keep you on the track every step of the way.
Chapter 6: Immediate Steps to Beat Financial Stress
When financial anxiety hits hard, your brain goes into fight-or-flight mode. This usually leads to either panic spending (to feel better) or complete freeze (doing nothing). Both are dangerous.
Instead, you need some immediate steps you can take right now.
Step 1: The Immediate Breathing Room
Find $50 to $100 This Week
You don't need to solve the entire problem today. You just need to find one quick win. If you can free up a small amount of money, then planning for interest rate rises becomes easier, crushing bad debts faster becomes more realistic which in itself frees up more money.
This first step can make all the difference to your financial stress, as you are no longer reacting - you are setting a direction. While the first step is also the hardest, the good news is once you manage it you can just repeat and do more of the same.
The Subscription Audit
As well as the spending review covered earlier, where you go through your bank and credit card statements from the last three months, specifically look for recurring charges, and more importantly, decide if you still need them.
According to consumer research, the average Australian household has 5-7 active subscriptions they're not fully using, with common culprits including:
1.
Multiple streaming services (Netflix, Stan, Disney+, Binge, Amazon Prime)
2.
Gym memberships not being used
3.
App subscriptions forgotten about
4.
Magazine or news subscriptions on auto-renew
5.
Software or cloud storage you've outgrown
For example, $180 per month in subscriptions you've completely forgotten about, or no longer need, is $2,160 per year - enough to cancel an interest rate increase on a $400,000 mortgage.
The Insurance Loyalty Tax
If you've been with the same car, home, or health insurer for more than two years, you're almost certainly paying a "loyalty tax." According to the Australian Competition and Consumer Commission (ACCC), loyal customers can pay 15 to 25% more than new customers for identical coverage.
Do a quick search online, find out current rates, then call your providers and ask them to match competitor rates. If they won't, you may need to switch. Even saving $30 per month on car insurance is $360 per year.
Step 2: Change Your Approach
The "Pay Yourself First" Game-Changer
This sounds counterintuitive when you're stressed about money, but here's why it works: most people pay everyone else first (bank, bills, groceries, petrol) and try to save "what's left." In 2026, there's never anything left.
Instead, the moment your salary hits your account, move something - even $50 - into a separate account or your mortgage offset. Once you move the money, it is no longer available to spend, so you are guaranteed to have it left over each month. Best of all, you probably won't even miss it!
Automate the process (for example, set up a direct debit or transfer) and it will always happen, no matter how busy life gets, or you go on holiday, or you get snowed under at work. This small amount can then regularly be put towards paying down bad debt, setting up an emergency fund, crushing your mortgage, or whatever else is on your priority list.
Once you take this first step, you can progress to three different money flows each month. For example, one amount for your important goals (like bad debt, extra mortgage repayments), a second amount toward long term rewards (for example, that holiday or new car you need) and a third amount towards having fun (a small amount each pay that you can blow on anything you want, so you keep some fun, but don't blow the budget).
TIP - MoneyFormula is designed to work with money flows and buckets and will instantly help you set up you first $50 bucket so you can see exactly what you can save and how it will help. It has three buckets you can progress to called "Wealth Goals", "Rewards Savings" and "Fun Spending" designed to help you pay yourself first before all of you income just goes on expenses.
Chapter 7: Lock in Your Future Success
Once you've addressed the immediate financial problems, it's time to build systems that prevent future stress. This can be done with a set of good habits as well as working out your priorities and locking in your goals.
We'll look at a few quick habits that will keep your finances running smoothly, then we will dive into setting goals.
The Cash Flow Buffer
Instead of living paycheque to paycheque, look at building a one-week or one-month buffer. This means having one week's or one-month's worth of expenses always sitting in your account before the next paycheque arrives.
This small buffer means:
1.
No more stress about "when does my pay come in?"
2.
No more overdraft fees or extra high interest pay day loans
3.
Actual breathing room between pay cycles
4.
No micro managing or stressing day to day about bills
Having the cash flow buffer means you no longer have to worry about every bill and when it will turn up. You simply have to work out the monthly total and then know that you have it covered. This can be a huge help in fixing financial stress, because you swap daily and weekly worrying about money, with a simple once a month plan.
You can build this up gradually by keeping an extra $50 to 100 each paycheque until you've built up the buffer you need.
With your larger bills (for example, yearly car insurance) you can either switch them to monthly with your provider, or work out the monthly average and put a small amount aside each month so that when the bill comes around you have enough to cover it (often called drip funds, as you drip a small amount in regularly so you build up enough).
TIP - MoneyFormula has a "Next 12 Months" report that shows you month-by-month what you need. It takes into account yearly bills (for example, Car Insurance, Yearly, In February) as well as monthly and regular bills, doing all the work for you. It builds it automatically from your simple budget so you can instantly see what you need month-to-month at a glance"
The 30 to 90-Day Spending Review Habit
Every 30 to 90 days, come back and do a quick spending review. Go over the last one to three months of transactions from your bank and credit cards, categorise them, and compare to your budget.
This regular check-in helps you catch subscription creep, identify new money leaks, and adjust your budget to match reality. It's not about perfection - it's about awareness.
TIP - MoneyFormula has an "Auto Matching Tool" where it automatically assigns categories to transactions you have previously categorised. This can be a great help as when you do your spending review it is really easy to find transactions you haven't seen before (from new spending or even from fraud).
The Mortgage Health Check
Don't forget to check and review your mortgage as your circumstances change. Unfortunately lenders often give better rates to new borrowers, while leaving existing borrowers on old packages that go a little stale.
When you do a review, you should check:
1.
Your current interest rate vs market rates
2.
Whether your offset account is properly linked and working
3.
If there are any fees you can eliminate
4.
Whether your loan structure still makes sense
5.
If you've been paying extra and building equity, do you qualify for lower rates?
6.
If you are on a package, whether you are really getting the benefit for the yearly cost.
You don't need to refinance constantly, but knowing where you stand reduces anxiety and helps you make informed decisions to get the best deal.
Wealth Goals
The next important part to locking in your success is having a plan going forward, so you don't leave your success to luck. This can be as simple as prioritising your wealth goals and lining them up.
For example, you might want to start by setting up a small emergency fund (so if an unexpected bill comes through you don't reach for the 22% credit card), then target bad debts and rolling minimum payments from one to the next to really crush them quickly, followed by topping up your emergency fund and then tackling your mortgage.
Let's look at each of these in more detail.
The Emergency Fund
An emergency fund is an account where you put extra money aside to protect you when something unexpected comes along, for example a vet bill, a car repair or even losing your job.
Financial experts often say you need 3 to 6 months of expenses in an emergency fund, and for most Australian households, that's $15,000 to $30,000 or more.
I'm not disagreeing with this number, but if you are currently stressed about money then coming up with $15,000 to $30,000 is going to feel impossible.
If you need to, start smaller and build up over time. Something is better than nothing. Even $1,000 can be a great start to save you dropping back to more debt.
Imagine you are starting to turn things around and taking control of your finances, you are paying yourself first, and then suddenly an unexpected bill comes through and wipes out months of progress and sets you back to square one.
Or alternatively, you have $1,000 on standby to draw on, so you can cover the expense and keep going. It can make all the difference between giving up or keep going.
If you are struggling to save anything to kick start your emergency fund, look around the house for things you can sell, take on a side hustle, or even budget a little harder at first to help set up this safety net. After the first $1,000 you can work towards $2,000. Then one month of expenses. Every step up gives you more breathing room when unexpected expenses hit - and they always hit.
If you are disciplined with money, you can even keep your emergency fund in your mortgage offset account (if you have one). Not only is it easily available, but it will help you reduce your mortgage interest every day it sits there. But, if you know you are tempted to spend money, you are better off locking it away in an account that takes effort to get to.
Target Bad Debt
Once you have a small emergency fund set up, look to target bad debt (as we covered earlier). Pick a debt strategy and decide how to use the extra $50 a month you're paying yourself first. Often knocking off the first debt can be a great win, not just emotionally, but it also frees up that minimum payment you can start to use on other debts.
As we saw before, if you have a credit card with a minimum of $25 a month and you pay it off, that $25 becomes available. Add it to you $50 you are already paying yourself and you instantly have $75 for no extra work.
Target the next debt with the $75, then when the minimum payment frees up, use that as well.
Crush Your Mortgage
After you have created your emergency fund, targeted your bad debt and gone back and topped up your emergency fund you are in a great position.
Now it is time to seriously tackle your mortgage. Using the minimum repayments from your bad debts and the pay yourself first monthly amount, focus in on your mortgage.
Discover when you will be debt free and how much you will save with the extra payments you have available and any offset or redraw you can keep in your mortgage. It is a great way to stay motivated as you move toward the security of owning your own home.
TIP - MoneyFormula lets you pick all your wealth goals (for example, create an emergency fund, then crush bad debt, then top up emergency fund, then crush your mortgage) and instantly show your when you will achieve all your goals, when you will be debt free, how much you will save and what it will take. You can set you extra payment amounts, choose the minimum debt payments to roll over and switch goals on and off to see what works best for you.
Chapter 8: Grab Your FREE Employer Benefits
If you're reading this at work while worrying about money, you're not alone. You're one of hundreds of thousands of Australian employees dealing with the same thing.
This is a National Crisis - Not a Personal Failure
According to AMP research, 50% of Australian workers are currently affected by financial stress. That's 1 in 2 people in your workplace.
This isn't just affecting you - it's affecting your colleagues, your team, and your entire organisation. And here's something important: your employer knows this is a problem.
Why Your Employer Cares
Financial stress doesn't stay at home. It follows employees to work, affecting:
Productivity
Financially stressed employees lose an average of 6.9 productive hours every week dealing with money worries—that's nearly a full workday lost to stress, distraction, and anxiety.
Focus and Concentration
It's hard to concentrate on work when you're mentally calculating whether you can afford this week's groceries or next month's mortgage payment.
Health and Wellbeing
Financial stress leads to increased sick days, workplace injuries, and long-term health problems.
Staff Retention
Financial stress is a major factor in employee turnover, costing companies significant recruitment and training expenses.
The financial impact on employers is staggering: between $2,100 and $3,900 per stressed employee per quarter, and that's before factoring in sick leave, low morale, workplace injuries, and turnover costs.
Forward-thinking Australian companies recognise that when their employees are financially secure, everyone benefits. Financially stable employees are more focused, more productive, more engaged, and more likely to stay with the company long-term.
Employee Benefit Programs
Many Australian employers are now offering financial wellness programs as part of their employee benefits, so make sure you grab what you can.
This might include:
1.
Access to budgeting and financial management tools
2.
Financial counselling services
3.
Employee Assistance Programs (EAPs) with financial support
4.
Educational resources and workshops
5.
Discounted or free access to financial wellness apps
6.
General discounts to all sorts of goods and services
Check what's available to you - Look in your company benefits portal, speak with your HR team, ask your colleagues or check your Employee Assistance Program.
Take advantage of what's offered. The support you need might already be waiting for you.
TIP - Check if can get free or discounted access to the MoneyFormula App App through your employer. MoneyFormula should be listed on your employer's benefits portal, but If not, get your HR team to reach out to us and we will help set it up.
Chapter 9: Bob & Jill Find $73,477 in 10 Minutes
We've covered a lot so far, so now we are going to look at a quick case study of how you can use MoneyFormula to bring together all of these tips, tricks and strategies to turn your finances around.
First, we'll meet Bob and Jill. Like many Australian families, they were financially stressed with a mortgage, credit cards, a personal loan, and rising cost of living expenses. They had no clear path forward and felt overwhelmed.
Within 10 minutes of using MoneyFormula, they discovered $73,477 in potential savings. Here's what happened:
Case Study: MoneyFormula's Four Simple Steps
Step 1: Pay Yourself First
Bob and Jill entered their accounts and prioritised just $50 of their income towards their wealth goals. MoneyFormula instantly showed them $73,477 in potential savings compared to the bank's way of doing things, when each debt would be paid off, and gave them a clear path forward.
Step 2: Create a Simple Budget
They created a quick MoneyFormula budget and found another $50 they could put towards their goals, increasing their total savings to $85,821.
Step 3: Crush Debt
Next, they tested different debt strategies in the Debt Crusher and locked in a plan to cut 10 years off their mortgage, pushing their savings to $195,143.
Step 4: Review Spending
Finally, they did a spending review and discovered another $250 they could free up, bringing their total savings to $199,234.
Four simple steps. $199,234 in total savings. From stressed to in control.
See Bob & Jill's Journey For Yourself
Here's the best part: Bob and Jill's complete financial situation is built into MoneyFormula as sample data. When you sign in, you can explore their accounts, test their debt strategies, review their budget, and see exactly how they went from financial stress to savings of nearly $200,000.
The Roadmap to Success video series (available in your MoneyFormula dashboard) walks through Bob and Jill's step-by-step journey, showing you exactly what they did to set up their data and discover their savings.
You can follow along with their story, or jump straight in with your own numbers to see what's possible for your situation.
Chapter 10: Your Next Steps - From Stressed to In Control
Financial stress doesn't disappear overnight. You didn't get into this situation in a day, and you won't get out in a day. But you can change the direction in the next five minutes.
The difference between feeling like a passenger (helpless, anxious, overwhelmed) and feeling like a driver (in control, making progress, seeing a path forward) is often just visibility.
When you can see where your money goes, understand how your mortgage works, and have a clear strategy, the stress starts to lift.
The MoneyFormula Approach
MoneyFormula was designed and built with the Australian homeowner in mind. It's an easy to use tool for people who want to beat the banks at their own game.
The approach is simple: Follow the four simple steps to help you see your complete financial picture, test different strategies with your actual numbers, and set your clear path forward. No generic advice from banks trying to keep you in debt for 30 years - just YOUR numbers, YOUR situation, YOUR path.
The Debt Crusher tool lets you compare different debt strategies and see exactly when each debt will be paid off. The mortgage tracker shows you how changes affect your total interest. The spending review finds those hidden money leaks. The budget tools help you plan and stay on track.
Most importantly, you can see the impact in real time. See what happens if you switch to fortnightly payments. Compare snowball vs avalanche debt strategies. Explore how your offset account affects your mortgage. All with your real numbers.
Take Control Right Now!
You can't beat what you can't see. Every major bank has teams of analysts, actuaries, and mathematicians working to maximise their profit from your debt. It's time you had your own tools.
Try the MoneyFormula Four Simple Steps today and discover for yourself exactly where you stand.
See your real "mortgage-free" date. Find your hidden money leaks. Test different debt strategies. Take back control!
The banks designed the system to keep you in debt and make profits, MoneyFormula has been designed to help you fight back.
Give MoneyFormula a go today and see what you think.
Note on Privacy
MoneyFormula is 100% Australian Made, Owned and Loved and was built specifically for solving Australian household financial problems. We doesn't sell your data. You don't need to provide bank logins. Your financial business is your business - we are here to give you the tools to take control and we've been doing it this way for over 20+ years.
Frequently Asked Questions (FAQs)
Q: I can barely make minimum payments. Where do I even start?
Start with the "Immediate Steps to Beat Financial Stress" in Chapter 6. Find $50 to $100 this week through subscription cancellations or insurance reviews. One small win breaks the paralysis. Then consider reading our article on Quick Spending Review to find more hidden expenses.
Q: Should I pay extra on my mortgage or build an emergency fund first?
Consider building a small emergency fund first ($1,000 to 2,000) so unexpected expenses don't force you into high-interest debt. If you are good with money then you could do both: keep building the emergency fund in your mortgage offset (if you have one) so it saves interest while remaining accessible. Read more in Cash Flow & Home Budget Success article.
Q: My partner and I keep fighting about money. How do we stop?
Consider the "bucket" approach: one joint account for shared expenses (mortgage, bills), separate personal accounts for discretionary spending. This reduces conflict because each person has autonomy within agreed boundaries. Focus discussions on shared goals ("mortgage-free in 15 years") rather than spending criticism.
Q: How do I know which debt to pay off first?
If you need motivation and quick wins, use the snowball method (smallest balance first). If you're focused purely on mathematics, use avalanche (highest interest first). If there is a debt that makes you feel back get rid of it first. All strategies can work - choose the one you'll stick with. Our Debt Crusher article explains both strategies in detail.
Q: Is it worth switching to fortnightly mortgage payments?
Mathematically, yes - just make sure you use the 1/2 monthly repayment amount paid fortnightly (some banks give you a true fortnightly repayment and that won't work). Half monthly results in one extra monthly payment per year, saving years off your loan and tens of thousands in interest. See our article on Fortnightly Repayment Savings for the detailed mathematics.
Q: What's the fastest way to pay off my mortgage?
The combination of: (1) switching to fortnightly payments, (2) maximizing your offset account balance, (3) making extra repayments when possible, and (4) checking that you are on a good rate and getting the best deal. Even small extra amounts like $50 to $100 per month can cut years off your loan. Read How to Own Your Home Mortgage Free Sooner for detailed strategies.
Q: Should I use my offset account or a savings account for emergency funds?
If your mortgage rate is 6.5% and a savings account pays 4.5%, the offset is mathematically superior. Plus, the interest saved is tax-free (unlike savings account interest which is taxable). Read our article on Mortgage Offset Interest Savings for the complete comparison.
Q: I'm drowning in multiple debts. What order should I tackle them?
List all debts with their interest rates. Credit cards at 20% to 22% are "financial house fires" - consider addressing these before lower-rate debts. Always make minimum payments on everything, then put any extra money toward your target debt. See Learn How to Pay Off Debt Fast for a step-by-step guide.
Q: How much should I have in my emergency fund?
The traditional advice is 3 to 6 months of expenses, but if you're currently stressed, start with any amount your can afford (something is better than nothing). Then build it up over time. Each milestone gives you more security and reduces stress. If you are good with money you can consider keeping it in your mortgage offset where it works double duty. Use this Emergency Fund step-by-step guide for the easiest way to create then top up your emergency fund using MoneyFormula.
Q: What's the "Pay Yourself First" method?
Instead of paying all your bills then saving "what's left" (usually nothing), automatically transfer money to savings/offset the moment your salary hits. Even $50 per paycheque. This psychological shift from "last priority" to "first priority" changes your relationship with money and can mean you always have the money to tackle your goals. Read more in the Pay Yourself First guide.
Q: My budget never works. Why?
Most budgets fail because they're based on what you think you'll spend, not what you actually spend. Consider creating a budget AND doing a spending review. When you compare them, you'll see the gaps. Adjust your budget to match reality, then work on changing the reality. See Why You Need a Budget AND Spending Review article.
Q: How often should I review my budget?
When starting out, do weekly or fortnightly reviews to catch issues quickly. Once you're comfortable, move to monthly or quarterly. The key is regular review - budgets aren't "set and forget." Life changes, expenses change, your budget should change too. Read our Five-Minute Budget article for a simple approach.
Q: Are subscription services really costing me that much?
The average Australian household has 5 to 7 active subscriptions totalling $50 to $100 per month. That's $600 to $1,200 per year. Many people forget about subscriptions entirely - streaming services, apps, gym memberships, software. A spending review and quarterly subscription audit can find hundreds in savings.
Q: What's the biggest money mistake Australian homeowners make?
Treating the 30-year default mortgage term as inevitable. Banks structure loans to maximize interest and profits over time. Small actions - fortnightly payments, offset accounts, small extra repayments - can cut 5 to 10 years off your mortgage and save $100,000+ in interest. See Beat Your Mortgage in Four Easy Steps .
Q: How do I reduce financial stress when everything feels overwhelming?
Break it down. Don't try to fix everything at once. Find $50 to $100 in savings. Set up a simple budget. Do a spending review. Pick your debt reduction strategy. Lock in your goals. Small wins build momentum and confidence, reducing stress far more effectively than trying to solve everything simultaneously.
Appendix: Financial Help and Support Available
As Australian homeowners, we have legal protections and support systems that many don't know exist.
Australian Hardship Provisions
Under regulations enforced by ASIC, Australian banks are legally required to provide hardship assistance if you're struggling with repayments. This can include:
Repayment Holidays - Pausing your mortgage payments for 3-6 months. Warning: Interest still accrues during this period, so your loan balance will grow.
Interest-Only Periods - Switching temporarily from principal and interest payments to interest-only. This significantly reduces your monthly payment amount, giving you breathing room.
Payment Restructuring - Extending your loan term to reduce monthly payments, or switching payment frequency.
How to Access Hardship Support
Every major bank - Commonwealth Bank, Westpac, NAB, ANZ- has a dedicated hardship or financial difficulty team.
You need to:
- Contact them proactively (don't wait until you've missed payments)
- Explain your situation honestly
- Provide documentation if requested
- Propose a solution (what would help you)
- Explain your situation honestly
- Provide documentation if requested
- Propose a solution (what would help you)
The banks are required to work with you in good faith. If they don't, you have recourse.
The Australian Financial Complaints Authority (AFCA)
If your bank refuses to help or treats you unfairly, you can lodge a complaint with AFCA. This is a free, independent service that:
- Investigates disputes between consumers and financial institutions
- Often freezes any legal action while investigating
- Can order banks to provide remedies if they've acted unfairly
- Often freezes any legal action while investigating
- Can order banks to provide remedies if they've acted unfairly
Many Australians don't know AFCA exists. It's a powerful safety net.
Australian Free Financial Counselling
Financial counsellors are free, independent professionals who can help you:
- Understand your options
- Negotiate with banks and creditors
- Create realistic budgets
- Navigate hardship processes
- Negotiate with banks and creditors
- Create realistic budgets
- Navigate hardship processes
They're not financial advisers (they don't sell products), they're support people. The National Debt Helpline (1800 007 007) can connect you with a counsellor in your area.
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PLEASE NOTE: The information in this article is general in nature. It does not take into account your personal objectives, financial situation or needs. Please speak to a qualified financial adviser if you need specific advice on your finances.