There are many people who live with debt. It’s something that is completely normal, however, it is something that can easily get out of control and start impacting more than just your finances. Whether you have fallen behind with your car finance, student loans, credit card repayments, mortgage, or other credit, it can have a huge impact on your finances and personal life. 

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When you are in debt that you can no longer get control of you may need to seek further help from a debt advisor or bankruptcy attorney, discovering all your options, will help you to feel less worried and start sorting out a better financial future. 

If you want to start making a big change with any debt issues, have a look at the tips below: 

Create A Financial Plan And Budget 

If you want to start claiming back control with your debts, you need to have a financial plan and budget that you can stick to. They provide you with the footing to take you down the road to financial success. Once you have created it, it is imperative for you to follow it and stick to it. This means you need to track it. It makes you accountable if you track what you spend and how you are doing. 

Remember That Debt Is A Priority 

Debt has to be something that you tackle head-on rather than hiding away from it. Not all debt is equal either, for example, you should make sure debts that are secured against your home or have higher interest rates are paid off first. Things such as your rent and mortgage need to be up to date, so, if you have any arrears always clear these first. Where possible, you should refinance and look for better rates on things such as credit cards and personal loans. 

Look At Refinancing 

It is possible to move some of your debts by refinancing for better deals and lower interest rates. These will often be given to you between 6 and 12 months interest-free where you should aim to pay off as much of it as possible. If you are paying high interest on your credit cards, it is always worth looking for a balance transfer card so you can try and minimize the amount of interest you are paying. Checking your credit rating is a great way to monitor if it could be the right time to look for new offers. You will usually find pre-approved offers that won’t harm your credit score if you apply. 

Always Pay On Time 

If you fall behind on a payment it can be extremely different to get back on track. The best way for you to get a hold of your debts is to ensure you pay on time and every single month. Even if it’s just the lowest payment required, paying on time will make sure your credit score doesn’t get damaged. If you can make small one-off payments do it. If you are ever concerned about meeting your payments, speak to your lender and explain your situation, they will usually be able to help you. 

These are four great ways to make sure you look after your finances. Do you have any other tips that could help? Please share them in the comment below.

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Everyone has debt.

The right kind of debt is an indicator of your financial literacy and investment acumen. A car loan that enables you to get to work hassle-free and a mortgage to purchase your first home are both examples of good debt. The bad kind, however, keeps you from moving forward. What’s worse about bad debt is that it can lead to you sinking deeper and not being able to get out.

To successfully manage debt and eventually get out of it, you need to come up with a good plan and stick with it. Check out the following strategies you can implement so that someday, debt will become a thing of the past.

1. Calculate how much you owe.

There’s nothing like the cold, hard truth to know exactly where you stand, debt-wise. Make a list of your IOUs, including the creditor’s name, date of the loan, balance, interest rate, minimum monthly payment and the last payment made.

Gather all of your current bill statements (loans, credit cards, student loans). Include medical bills, family loans and monthly expenses. Check your credit reports to ensure everything is correct/accurate. Find out if your credit score makes you eligible for debt consolidation or lower interest rates.

Know your monthly take-home pay and set a goal. This means making a calculated decision to pay off all your debts within three years or more.

2. Find out if you can reduce your interest rates.

Monthly loan and credit card payments that are just enough to cover the interest rates can be frustrating as doing so hardly makes a dent on the principal. To address this problem, you may want to look at lowering your interest rates in the following ways:

• Find out if you qualify for a credit card with a lower interest rate.
• Try to negotiate a lower rate in a current card you’re paying off.
• Apply for a balance transfer credit card with a zero intro rate or lower interest rate.
• Look for a loan with a lower interest rate.
• Consolidate all of your student loans.

Of course, in order to do these things, you need to do a bit of research, make calculations and use your negotiating skills to get the help you need.

3. Pay more than the “minimum amount due.”

By this time, you may already know that paying for exactly what’s due for the month (minimum) won’t make a dent on your total credit card debt or loan. So aim to pay more than what’s stated. If it says $150, aim for $250-300. But make sure there’s no prepayment penalty if you’re paying off a mortgage, and that any extra payments you make are going towards the principal, not the interest.

4. Earn more money while spending less.

It’s easy enough to understand how one can earn more money. It doesn’t have to be a raise or finding a better-paying job. You can tap into getting a side gig or a weekend job to augment your income. This can be anything from walking dogs, babysitting or performing odd jobs on certain days of the week.

You should also consider downsizing your budget or spending less. This can be something as simple as giving up cigarettes, your morning cafe latte, or eating out less.

5. Set a budget and debt payoff plan you can stick to.

Now that you have a complete, detailed picture of your financial status, know how much money you need to cover your needs and monthly debt repayments. Having a set budget and debt management will help you stay on track, no matter your goal and timeframe.

Be patient and stick to your plans

Getting rid of debt is no mean feat. But with patience, diligence and determination, you can definitely succeed. Once you’re done, you can move on to fulfilling your other plans.

These can include enrolling in a business course and becoming an entrepreneur, learning a new language or traveling overseas. Whatever your future plans, you’ll be sure to accomplish them by taking control of your finances now.

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Oli Kang
Oli is a working mum who has a passion for teaching and all things educational. With a background in marketing, Oli manages the digital channels and content at Courses.com.au.

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