Have you heard of the Australian Debt Clock? If you haven’t its worth looking at.
It tallies, live, the amount of debt that Australian’s have – and let me tell you, it goes up faster than you can imagine.
As I type this, Australian’s have:
– $53,085,177,034 in personal debt
– $40,184,784,581 in credit card debt, and
– $1,646,023,414,061 in housing debt.
And those numbers will be well and truly out of date by the time I send this blog!
So if you’re struggling with your debts, as I imagine a lot of Australians are with numbers like these over our heads, I wanted to give you some tips to get on top of them – asap!
Step # 1: Get a real view of what you owe
First things first, you need to tally up your debts. Gather all your statements and write down what you owe on each debt, who the providers are, what your minimum regular repayments are and what interest you’re paying. It’s important to have a clear picture of where you stand.
Step # 2: Prioritise
Take a look at your income. Can you afford to cover all your repayments as well as your essential living expenses, with your current income? If so, how much extra can you afford to put towards your loan repayments?
If you can, pay at least the minimum repayment on all your debts while you work out which debt you’re going to focus on paying off first. Depending on what types of debts you have and how much you owe, you could aim to pay off the debt with the highest interest rate first, or pay off the smallest loan first to get you going and keep you motivated.
Step # 3: Consider consolidating your debts
A personal loan that consolidates all your debts into one can potentially assist you if you are overwhelmed with paying multiple loans at once.
Comparison websites such as RateCity, Finder, Mozo, and Canstar can help you to identify the competitive offers and interest rates in the market.
Tip: If your loan application is declined, make sure you investigate why. This is because applying to multiple lenders in a short space of time is the fastest way to destroy your credit rating, so tread carefully.
Step # 4 : Get help sooner rather than later
If you can’t keep up with repayments on your mortgage, personal loan or credit card, talk to your lender as soon as possible, ideally before you default on your loan. This can help you protect your credit score as you may be able to come to an agreement on slightly altered terms for your loan while you’re experiencing financial stress and in doing so avoid a default appearing on your credit file.
Tip: There are also free services available to help you including financial counselling from the National Debt Helpline.
The earlier you get help, the better.
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