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5 tips to getting ahead of your debt

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It’s hard to manage multiple debts – paying off your home, upgrading the car, school fees… they all add up! Learn how to get ahead of your debt with these top tips.

Debt is a necessary part of our lives and the reason we all take on debt is to make a better future for ourselves and our families. There’s nothing wrong with that. But, sometimes, we end up borrowing more than we should and then life can be a bit of a juggle. It’s never too late to get on top of it all though, so we thought we’d share these top 5 tips for getting ahead of your debt.

1. Take the time to write all of your debts down

Before doing anything else, take the time to sit down with a cup of tea and write down a list of exactly what you owe. Make note of who you owe it to and the interest rates and fees that apply to each. Seeing your debts all on one piece of paper will give you a clear view of what is owed and help you to prioritise.

2. Categorise and prioritise your debts

Next, break your debts down into two categories – ‘Desirable’ and ‘Keen to Clear’. Your ‘Desirable’ debts will be things like your mortgage – debts that are necessary, long term and on low interest rates. The ‘Keen to Clear’ debts will be things like credit cards – debts you’re keen to clear as soon as possible to avoid unnecessary interest payments and to improve your cash flow. Once you’ve popped them into categories, start to prioritise. Review the ‘Keen to Clear’ category first, focusing on the highest interest rate debt to begin with.

3. Consolidate, consolidate, consolidate in one low interest rate loan!

If you can, consolidate all your ‘Keen to Clear’ debts into one low interest rate loan. You’ll be able to see all your debts rolled together into one lump sum, which will be paid off at the end of your loan term. Plus, you’ll be avoiding the high interest rates the individual debts may have been subjected to, and you’ll know exactly how much you need to pay every month to clear the debt. Why not write down that final pay-off date and stick it to the fridge for continued motivation?

4. Review your ‘Desirable’ debts

Once you’re on top of your ‘Keen to Clear’ debts, take the time to review your ‘Desirable’ debts. Make sure you’re on the best interest rates and terms available for your situation.

5. Allow yourself one small treat each month

Getting ahead of your debt doesn’t mean you always need to be a scrooge. If your budget allows, put $50 or $100 every month toward a small treat for you and the family (and stick to that amount!). You’ll have fun getting creative with ideas of what to do and that little splurge will keep the importance of paying off those debts in perspective.

 

Nodding along? Thinking these tips would work for you? Grab that cup of tea and get writing! Then, talk to us about our low interest loans and how we can help consolidate your debts. Call us on 1300 747 747 or head here to read more about our Personal Loans.

 

  Important Information

The information in this article is of a general nature and does not constitute as advice in relation to any investment or purchase. It has been produced without taking into consideration your personal financial circumstances, objectives or needs. Prior to making any decision you should conduct your own investigation and analysis of any benefits or costs associated with such. You should seek your own independent legal and financial advice. Terms and Conditions, normal lending criteria, fees and charges apply to all loan applications and are available on request. Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557, AFSL/Australian Credit Licence 238305.

 

Article published January 2017