Did you know in March 2020, the Australian government was under the debt of $573.1 Billion, which was 4% more than in 2017? According to this data, if you estimate each person’s debt in Australia, it would be probably $97,000. By keeping in vision the debt management in Australia, the Australian government has implied some new rules to provide people relief to some extent. Hence, there is no doubt that as an Australian person, you are looking forward to eliminating your debts; however, you only need some assistance with tips to get rid of them. Nevertheless, if you decide to pay for a minimum of $5,000 per month, it would take several years to clear the debt. I am here to guide you with some tips and guidelines, for which you can clear your debts, step by step.
Debt consolidation
Since everybody knows that there is a limit on each card to take a loan and you cannot cross that limit, you usually use multiple credit cards to take a loan from several bank companies; these debts may include house debt, car loan, etc. However, the first step involves combining all your debts and making the calculation. The debt consolidation involves taking a small loan on personal behalf, which has low-interest rates and with this loan and paying all previous debts. This step would help you pay your debts sooner and more effortlessly. Nevertheless, the new loan which you got to pay off previous debts can be paid gradually.
There are numerous banks, which offer you personal loans with much encouraging interest rates, so you can take the most suitable package and pay off your debts on a monthly or fortnightly basis. To get these personal loans, you can visit banks or apply online. Keep in mind; satisfy with the interest rates which should be low and then apply for new debt, otherwise you would get into new high-rated debt.
Take stock
To manage your debts, the best thing is to watch your expenditures. You need to evaluate your spending rates and try to lessen additional expenses. Other than this, try to calculate all your previous debts which you acquired in the past and make an estimation by comparing them with the existing one. Moreover, write about each stuff you purchased, or you spent money. This thing would keep you informed, where you spent your money and how much did you save. Also, take notice of how frequently you withdrew money for your bank and how indeed do you need it.
This activity of keeping an eye on the single thing would make you cautious on saving money, and it would work to make you diminish your expenses on extra stuff. You can stock these savings and put them together at the end of the month. No matter how much money you saved, this exercise would also support you in future.
Keep your debt on priority
The more often you avoid your debt, the more interest you would need to pay off. It is crucial to keep your loan as your primary priority because everybody knows it would never be forgiven by the creditor, so it is better to get rid off earlier if it seems difficult to pay off all debt at once, better to break it down into small sections and pay your debts into instalments. But do not try to avoid your loan or else you would be in more trouble in the coming days.
Cut off necessities
This step is similar to that of the stocking. Besides saving money, you need to lessen your necessities. It comprises changing your lifestyle and taking out all luxuries until you pay off all debts. You can change your big car into a small, wear less expensive clothes and shoes, or stop partying on weekends. As of my thoughts, debt is the most substantial load on the shoulder, and it needs to be removed first. So, it is better to keep yourself in harsh condition for a temporary period instead of being in debt for the whole life.
You might have thought that how much would I save from cutting off my provisions? So remember that something is better than nothing. If you avoid being into restaurants and celebrations, you can save the extent of the money and keep it aside. At the end of the month, you would get an amount which could be enough to pay at least one instalment.
In a nutshell, my end advice would be that try to take fewer debts once you have cleared all loans. Besides, you do not need to kill your supplies or salary; it’s just a small portion which you would keep aside and gather an amount. However, you can pay your debts off by dividing them into small portions on a monthly or weekly basis. Further, try to follow all these steps side by side to get rid of your debt sooner.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin