Debt is a reality for many Australians. But, sometimes it can be a struggle to stay on top of all your obligations. While it can feel overwhelming, ignoring debt can make the problem worse. So here are five tips to get yourself back on track.
1. Get a clear picture
When tackling debt, a good starting point is to get a clear picture of your current debt situation. Make a list of all your debts from smallest to largest, including their interest rates and minimum repayments.
2. Make a budget
After tallying up your debts, compare the money you have coming in with the money going out.
Write down your income such as salary or benefits. Then, look at your expenses including your rent or mortgage, food, transport, electricity, phone and debt repayments.
Once you’ve worked out where all your money is currently going, see if there is any spending you can cut back on. Any money saved can be used to make extra repayments on your debt.
3. Prioritise your debt
Not all debt is equal. Debts with higher interest charges grow faster than those with lower rates. So, it can make sense to pay down these first as they cost you more in the long term.
Paying off debt can improve your credit score. However, the reverse is also true – so continue paying off other debt on time so you don’t damage your credit score or rack up any penalties.
4. Shop around
Interest rates can really impact how much you pay over the life of your loans. So shopping around for a better deal or consolidating debt into a lower-interest loan can help improve your situation.
That said, this isn’t suitable for every borrower. As such, it can be a good idea to get advice from a broker before you make any application.
5. Contact your creditors
If you are experiencing financial difficulties, talk to your creditors rather than miss any repayments. This means you can avoid defaults and the damage they do to your credit score. Many creditors are willing to negotiate your debt and put you on a more affordable repayment plan.
Struggling to pay down your debts? At Credit Repair Solicitors we can help you negotiate with your creditors. Email email@example.com or call 1300 158 731 to find out more.