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What To Do If You Have High Interest Debts

What to do if you have high interest debts

It’s never too late to get out of debt. For most people, debt is the accumulation of many choices; a holiday paid on a credit card, designer shoes you never really needed (and don’t even wear anymore), birthday and Christmas toys that children have long since grown out of or grown bored of…You get the picture.  That’s not to say that all debt is unavoidable.  Life has a way of throwing the best of us curveballs.  It’s a given our cars will break down, home repairs will arise and need to be fixed immediately and sadly, at times we have no choice but to use credit. The cost of being unwell (or off work) can put all our accounts in the red.  If you’re tired of feeling overwhelmed by chasing your financial tail, then read on for some debt busting tips.

Get Real

You can’t tackle what you’re not prepared to face.  Take an honest look at your financial situation. Create a spreadsheet of all outstanding debts, including the outstanding balances, the interest rate(s) you’re paying and your monthly repayment amounts. 

Budget, Budget, Budget

If you’ve never written down how much your earning verses how much your monthly/weekly expenses are, then now is the time.  Categorise and list all your expenses and tally them up.  Take an honest look at your budget and pay special attention to ongoing and fixed costs.  Are you spending more than you’re making?  Are ALL of your expenses necessary?  Do you really need a bottle of red wine every week or monthly subscriptions to Netflix, Stan, and Disney?  

Prioritise To Prosper

Now that you’ve confronted your financial situation, give yourself a pat on the back because not everyone makes it this far!  It’s now time to look at re-organising your priorities.  What is essential, and what is non-essential?  What can you live without or live with less of?  If you cut back on something, can you use it to pay down a credit card faster?  

It’s in a lender’s best interests (pardon the pun) if you’re only making minimum credit card repayments because it will prolong the length of your debt.  With compounded interest, you’ll end up paying back up to 40% more interest (and fees) than you spent.

Plan Ahead

Try and save something each pay period. You could use that money to lessen the financial strain of buying Christmas presents at the end of the year. Buy items you love at the end of the season when prices are reduced. If it’s tech, keep an eye on when new products are set to be released and consider upgrading to a less recent product.  Get savvy and make considered purchases as opposed to splurges.

Debt Consolidation

If you’re someone who has multiple creditors, it may be worth consolidating your debt. Simply put, that means bundling up all your existing debts and getting a finance broker to find you a personal loan to consolidate your high interest loans and credit cards.  A personal loan suited to your needs can help you to pay down your debts faster.  Personal loans allow you to pay off, close, and cancel multiple creditors at once.   A personal loan can give you the flexibility of paying off all your debts to one lender at better interest rate, with more favourable and lower repayment terms.  If you have a home or investment loan, you may be able to consolidate outstanding balances into your mortgage. 

We have helped hundreds of clients achieve financial freedom and put more of their hard-earned dollars back into their pockets.  If you’d like a free budget planner to help you get started or want to speak with us to see if you can consolidate your debt, then don’t hesitate to give us a call.