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Article 5 tips to help you ditch your debt

By Cheryl Beasley
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33 Comment

A lot of people make new years resolutions with fitness goals in mind. From dropping a few kilos to starting to getting back into jogging. But what about financial fitness, reducing debt?

 

Here are 5 tips to help get your financial house in order:

Tip #1: Set goals for yourself!

No matter what position you’re in financially, you should always have a goal. Maybe it’s to get rid of your debt, maybe it’s to start saving, or maybe it’s to increase your superannuation contributions. Whatever the goal is, giving yourself something to strive towards provides a lot of direction – a critical element of being financially healthy.

So take a few minutes now and write down what it is you want for yourself, and what steps might support you getting it!

Tip #2 Ditch the debt

Australians as a collective people owe over $50 billion in credit card debt alone, and even a ‘small’ debt of $2,000 could take years to pay off if you’re not careful. Debt is a huge concern for this nation, so maybe it’s time you ditch it.

How? Make a plan, focusing on the highest interest rate debts first, and then the lower ones until it’s all gone. As you’re working to get debt free, analyse your spending habits to ensure there isn’t anything you could be doing differently to avoid getting into this situation again.

Tip #3 Manage your mortgage

The interest rate for mortgages is at a low of around 4%. Experts are anticipating this rate to stay the same, if not drop, over the coming years. This means you have a lot more wiggle room to pay down your mortgage right now.

See if you can’t make a few extra payments, or even increase your minimum payments temporarily, to ensure you’re taking advantage of the low interest payments. Lower interest means more payments being made on your principle debt, better for every one!

This may also be a good time to consider comparison shopping on mortgages or renegotiating your existing debt, as most banks are having to work to remain competitive with current rates.

Tip #4 Consolidate superannuation accounts

Superannuation accounts are great savings tools, but an unfortunately high amount of people are using them inefficiently by holding multiple superannuation accounts. You can boost your savings considerably just by consolidating your superannuation accounts, this will help you to avoid fees and over-insuring your funds.

Tip #5 Assess your insurance coverage

It’s always a great time to assess your current insurance coverage. Do you have the right amount of coverage, or are you over or under-insuring yourself? Are you with the company that offers you the most competitive insurance rates? Taking some time to do a little bit of comparison shopping now could result in significant savings down the line.

What steps have you taken to reduce your debt? Please share in the comments below.

Image courtesy of Shutterstock.com

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Comments

  • Good tips to know! Saving money is so important and getting out of dept is even more so!

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  • make sure that you check your bank statements. we were still getting billed for a streaming service that we forgot to cancel- 4 months worth!

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  • I think its important to remember that every cent is getting you closer so no matter how small a contribution you are making, it is more than was paid off beforehand.

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  • If you are paying for parking at your place of employment you may be able to salary sacrifice that too.
    While a lot of people urge you to put extra in Super, bear in mind you can’t withdraw any out of it unless you can prove genuine financial hardship.
    When I calcuate my budget I always add a mininum of 7 %–that included groceries as they never go up just $0.05 any more. It is likely to be at least $0.10 on a small item and a lot more on larger items. Some food items go up every 12 months, others go up a lot more frequently. Unless your different supermarkets are in the same shopping centre very close-by it often isn’t worth going from shop to shop. You may spend what you think you are saving in petrol, or even worse off.

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  • budget! shop at op shops, buy in bulk when on special

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  • My big thing is I stopped using my credit card and now im paying over double the required payment each month and I plain to clear the credit card and it will become my mega emergency backup rather then a normal part of life.

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  • Great ideas! With my hubby returning to study we have had to re-do our budget and these will be helpful.

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  • This heading title really struck me. It’s really true for me – I always start out with health goals but I think reducing debt would be a much better idea! Thanks for the inspiration (even if it’s not really tie for a NY resolution).

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  • Great ideas Cheryl. Thanks for sharing.

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  • Great tips and paying more than the interest on credit cards,loans etc is the only way to get ahead!

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  • Good tips. We have no debts, but no money either lol ! We have a low income, rent a house, have no pension building up and no life insurance….

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  • Great tips and they do work.

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  • I had to make a financial list this year and I’ve tried my hardest to stick with it, at least I’m going forward not backwards!!

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  • Great tips, not so much for every day Joe Blows tho. My daughter is in dire financial straits, but none of these will help her. Basically, she needs to be earn more money to be able to pay her debts

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  • I definitely need these tips. very helpful, thank you.

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  • And try not to take on new debt.

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  • Like it

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  • Fantastic tips. Try and only put on your credit card what you can pay in full each month to avoid interest

    • Yes, it’s the interest that seems to get most people into trouble with their credit cards.

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  • Check if you can salary sacrifice your mortgage payment, that way it is paid before you get funds to pay for other things with.

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  • The only tip I would add is to only spend on needs, not wants. Even when it comes to needs, look for the best value for money.

    • So right!! We all need to teach our kids this while they are growing up so it becomes second nature to them, that will save them a world of financial pain 🙂

    Reply
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