Did you know that Australians have one of the highest levels of personal debt in the world? This is mainly due to a lot of adults having mortgage debts because home ownership has long been considered an integral part of the grand Australian dream. We call this ‘good debt’, – one that increases wealth over time. ‘Bad debt’ however, means you have borrowed beyond your capabilities and find yourself in financial stress. Here we take a look at 3 hot tips for better financial freedom.
Stay On Top Of Debt
You can stop debt from snowballing by making sure you factor in debt repayments into your lifestyle BEFORE committing to a loan and leave some emergency money aside in case your circumstances change.
If you’re already struggling and need a starting point for your debt-reduction strategy, here are some ways to get out of debt:
- Stop creating more debt
- Increase your debt payments
- Pick a debt and give it all you’ve got
- Sell things you don’t need
- Drop expensive habits for a while
Learn more tips on how to manage your debt.
Budget Mapping
It’s a good idea to map out your budget. Having better budgeting helps you to feel in control of your money. You can put aside money for big bills when they arrive, and plan savings to achieve your money goals. It will also help you reduce any debts you may have therefore providing you with more financial flexibility.
You don’t need an expensive accountant to help with a budget; you can start one yourself by looking at where you are now, and where you want to be in the future. There are also numerous budget planners that can be found with a quick google search, and they’re usually free.
One of the keys to a good budget is discipline. Yes it may feel like a lot of planning; and yes you will have to decide what you can do without, but the resulting benefits are worth their weight in gold. Once you get a good budget properly in motion you’ll start to see that bank balance rise, or perhaps that overhanging debt disappears.
Here’s a quick to-do list for setting up a basic budget:
- Record your income
- Add up your expenses
- See if you can save
- Set a spending limit
- Review your budget regularly
See easy steps to get started with your budgeting.
What You Need To Know About Debt Consolidation
You could also consider consolidating your debts into one. A debt consolidation loan can help reduce the stress of multiple debts and interest rates and simplify your repayment schedule.
It’s good practice to get a few things in order before applying for a debt consolidation loan. Firstly, check your credit history. Your credit history is a record of your responsible repayment of debts, which will give you your credit rating. Lenders use your credit rating to decide to give you credit or lend you money. This knowledge can help you negotiate better deals (with a good credit rating), or help you understand why a lender rejected your application.
Gather up all your debt paperwork (unpaid bills, credit cards, other personal loans and the like) to give you an idea of how much you want to borrow for the debt consolidation.
Next, tally up your living expenses to give the lender an idea of your expenses. These are things like phone bills, car costs, gym memberships, streaming services, rent and groceries.
Finally, get your employment details in order. Get together 3 months-worth or more of your payslips so lenders can gauge your ability to afford loan repayments. All these details will help your application for a debt consolidation loan.
So why a debt consolidation loan? A debt consolidation loan can have several possible benefits:
- You only have to make one regular repayment, which may make your debt easier to manage.
- You might be able to save on interest charges if the personal loan has a lower interest rate than your existing debts.
- Fewer payments to make means you can keep track of them better meaning it’ll be less likely that you’ll be late on payments
For further details on how to get on top of debt contact check out Yes Loans’ debt consolidation information. Yes Loans provides fast, efficient debt consolidation loans, with loan protection options to protect you against unexpected financial hardship. Apply here, or contact one of our specialists to help guide you.