5 ways to get out of debt
According to recent research, Australia has some of the highest levels of personal debt in the world. While other countries have seen their debt levels decrease or plateau since the 2008 Global financial crisis, Australia’s debt levels have increased. Whether that be student loans, personal loans, mortgages, credit cards or other types of debt, it’s important to take control of your financial situation and get yourself set up for a more positive financial future.
Founder and CEO of Make The Most Of Your Money, Dominic Aarsen, has some tips for finding your way out of debt, and how you can move forward when it feels like money is holding you back.
1. A plan of attack is the key
“Stop beating yourself up about the debt you’re in. Step one is to write down a list of all of your debts in order from smallest to largest. Then, review the interest rates on each loan and prioritise them based on interest rate and amount owing.”
2. Don’t borrow money to pay money
“Using your credit card - which you owe money on - to pay for a bill which is overdue isn’t going to help solve your debt problem. Although it might be a hit to your ego, call the creditor (bill company, bank) and explain your problem and ask them how they can help. What many people don’t know is that creditors will often extend your deadline or give you an interest free period to help you try and repay the debt.”
3. Consolidate your loans
“Many banks offer the option to roll all of your debts into one loan while offering potential interest free periods or lower interest rates depending on your situation. Call your bank and financial institution (credit card company) and see if they can help you reduce your interest rate and Provide you with an interest free period to help you get back on top of your money situation.”
4. Start using cash
“Spending cash-only might seem rather outdated but it is the number one way to ensure you don’t overspend and only buy things you can afford. When we turn money back into something physical, our spending habits also change. Having seen it with many clients, when you take away the plastic cards and replace it with cold hard cash, how people choose to spend their money changes dramatically. Top tip - If you only use cash moving forward, you won’t be able to live outside your means.”
5. Slow down on the spending
“If your personal debt is growing, it simply means that you’re spending outside your means. We live in age of glorified Instagram-famous people and social media where everyone is trying to look rich or wants to be rich. Spend what you can afford rather than what you wish you earned.”
You might also like:
1 in 6 Aussies fall into this debt trap
