How to take care of your debt more effectively?

Last updated on November 25th, 2021 at 02:53 pm by Bill Tsouvalas

You have made some money, you spent some money, and you could have even fallen into the red but it doesn’t mean you are stuck there forever. Take control of your finances this year with these handy tips that can help you take care of debt more effectively.

Take care of your debt

1. Address the root of your problems

Spending. This could be the number one reason as to why many Aussies fall into credit card debt, take out payday loans, and borrow money when they should not be. The way in which you manage the money you get as an income and how you choose to spend it can have an influence on whether you living a debt free life. It starts with budgeting and a great deal of self-discipline to follow through to keep you from going in circles financially. It will boil down to cutting back on things that you don’t need to ensure that you are financially stable.

2. Creating a realistic budget

It is all about creating a realistic budget that is suitable for your finances. According to ASIC, Aussies forked out $ 3,799,910 on household expenses with the average household forking out $74,301. Writing down all your expenses and things you have to pay off can help you see where you are possibly using money that can be placed in other areas. There are a few expenses that you don’t need that can be cut away such as eating out, the gym membership you keep donating to. Avoid going to places or situations that will cause you to step out of your budget.

3. Look for deals that can help you save

According to research by UBank, 86% of Aussies don’t know how much money they are spending each month which can make it hard to see where they could possibly save. Saving doesn’t necessarily mean that you have to be a scrooge. Look for discounts wherever possible to cut back on expenses. If you own a rewards card or a loyalty card, now is the time to make use of the points system. Remember to be careful of overextending your budget in the name of gaining points.

4. Start a rainy day fund

An emergency can pop up when you least expect it such as medical expenses, repairing your vehicle, or a burst geyser can throw your budget off. Taking out a personal loan can help you take care of various emergency expenses and it comes with flexible terms that will not damage your budget. However, not everyone is able to afford to take out a personal loan. Having an emergency fund can create a buffer between yourself and life’s mishaps. Once again, it is vital that you create a realistic amount that you will be able to save towards to on a constant basis.

5. You can consider consolidating your debt

Taking care of your existing debt can help you kickstart your journey on becoming debt free. A debt consolidation loan can help you combine all your debt under one interest rate. This will then give you more control over your debt knowing that you will be paying one fee to take care of your debt. Speaking to a financial advisor or a broker is vital when it comes to finding a loan that is suitable for your situation.

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