If you’re having issues with debt, you’re not alone. Thousands of people fall into various degrees of debt every day, whether from poor spending habits, unexpected expenses, loss of job or other unfortunate circumstance – debt happens.
Getting out of debt does not have to be a difficult task. Depending on the severity of your debt you can enlist the help of a professional debt solutions provider or tackle it on your own with a bit of guidance.
Below is a list of tips and information on how to get out of debt in addition to information on Australia’s largest providers of debt solutions.
Budget: This is a must do if you are serious about getting out of debt. Even if you feel you know what the source of your debt issues are, creating an actual budget which outlines your total financial situation is critical. Professional services will also start here. It’s impossible to formulate a proper debt elimination strategy without understanding your total financial situation.
1. Once a budget is established start looking at problem areas, are there items you can cancel such at – gym membership, paid tv, other paid memberships, etc…
2. Are there areas where savings can be established – Bundling insurances, bundling phone, cable & internet, reducing certain service plans, changing utility providers, etc…
3. Itemise the current debts you have based on importance. This can mean the highest debt amount or perhaps the highest interest rate or fees. You will want to eliminate the debts that are the most serious first. A starting point is to take the savings created from points 1 & 2 and apply them to your debts list based on importance.
By doing the above as the initial step you will have a strong idea of your dealing with and where you should start. Next are things to look at for actual debt consolidation or elimination – Starting with simple to more complex or involved tactics.
Sell it: Go through the house and get rid of items that you no longer need or use. Pawn them, sell them online or have a garage sale. It’s amazing how much money you can earn from getting rid of unwanted or used items. Take the money and apply it to the debt.
Contact your creditors: Creditors are interested in money; they’d rather work with you in getting their money back versus hiring a debt collections agent to do it. Many creditors have hardship officers who will work with you to try and find mutually beneficial solutions. This can mean the creation of a new repayment plan and possibly freezing interest for a set period of time.
Have you heard of Financial Hardship? This is a process where your creditor(s) may work with you during your time of need. Unforeseen circumstances can pop up at anytime – job lost, hours reduction, injury, relationship breakdown, etc. Lenders understand this and many are willing to make adjustments to your repayment obligations during this time. This may include extending your repayment period and reducing the monthly payment amount or stopping repayments for a set period of time. They will essentially try to come up with a solution to help make repayments more affordable. Learn more about financial hardship here.
Debt consolidation: If you qualify, taking out a debt consolidation loan or credit card balance transfer may be ideal. This allows you to move multiple higher interest debts into one lower interest debt. A mortgage refinance can also be used as debt consolidation if you have enough equity in your home – with any type of consolidation loan, make sure that your repayments have actually reduced and that there is a real financial benefit to you.
Professional Help: There are 2 ways to handle this; free financial counsellors or other professional debt solutions providers.
1. Financial Counsellors – These are generally non-profits who are happy to look through your current situation and provide direction on what options are available to you…sometimes even referring you on to a paid service.
2. Debt Solutions Provider – These businesses will essentially go through your total financial situation in great detail and action the different options on your behalf or with you. Watch out for organistaions that ask for or charge a up front fee for their services, especially if its non-refundable. This can put you in a worst position if things don’t work out and your don’t go through with the service.