What’s the first step in reducing debt?
The First Step in reducing debt is to cancel certain direct debits, reduce lifestyle expenses and most of all budget! Cash flow is king and working with a Financial Planning Adviser i will show you how.
How common is it for people in Australia to carry consumer debt? (Credit cards, student loans, car loans, etc.?)
Household debt in the form of non-deductible and deductible debt are most common.
The banks keep offering more and more credit (Debt) to Australian consumers in order to boost the banks profit margins, passing on dividends to their shareholders.
What kind of debt is the most common?
(Credit cards, student loans, car loans, all of the above?)
The most common form of household debt is credit cards, second to credit cards are personal loans to buy cars and consolidate debt. Thirdly is property debt.
*The Generation Y, people born from 1981 to 1994 hold HECS-HELP loans, assisted funding to eligible Commonwealth supported students to fund their university studies.
Tip: Don’t leave your payments to a point where reducing debt is beyond your reach!
Is there a point at which debt is definitely a problem? (For instance, if debt payments are more than a certain % of your outgoing monthly payments? Etc.?)
Generally when credit cards are abused, poor management can lead to higher interest rates as much as 22.99%+, increased repayments, potential credit defaults, and in a lot of cases bankruptcies.
People only realise it’s too late when creditors start calling in the loans, mainly due to living a lifestyle where the expenses are higher than the income. Best practice is to save a minimum of 20%+ of your after tax earnings (Net).
Always be looking to reducing debts, costs and outgoings!
After that, how do you recommend that people reduce their debt?
Steps you recommend or advise?
- Analyse outgoings vs. incoming’s, then realise what is a luxury. I.e. Want V.s a Need.
- Dispose of toxic debt and then work out what assets can be used to either;
- Sell – Debt Reduction, or
- Using certain assets as security for a debt consolidation strategy.
- Work with a financial planner to make sure you don’t make any mistakes!
For staying out of debt in the future, stop using credit cards! Save as much as possible in cash and don’t buy lavish toys!. I.e Cars
Get education on how to budget, understand cash flow, know the difference between deductible and non-deductible debt – also known as good and bad debt. What you could also be doing other than reducing debts is, save more, pay down debt, grow your assets for retirement and most importantly seek a financial adviser to help you grow, protect and preserve your financial wealth.
For Reducing Debt call 1300 850 902 or simply leave your contact details below. Helping Australians with debt reduction challenges.[contact-form-7 404 "Not Found"]