Getting into debt can be fun and is not hard to do. On the other hand, getting out of the same debt is painfully difficult. Any debt is a liability regardless of whether it is a credit card or a student loan.
According to some statistics, one in every six people in Australia is struggling with credit card debt.
The burden of debt becomes lighter the moment you make it a priority. Worries will not pay off your debt. Below are a few financial tips that will help you reduce your debt.
1. Have a Budget
To reduce your debt successfully, you have to spend with a plan. Get the total amount you need for your expenses and subtract it from your total income.
Debts should be a priority. Therefore, the remaining amount after expenses should be committed to clearing debts.
Reduce your expenses if nothing remains after subtracting your expense costs from your total income. The same should be done if you spend more than you earn.
2. Increase Your Income
Increasing your income will help you pay off your debts without straining. You can raise your revenue by selling your belongings or getting a part-time job.
Use the extra money raised to clear or at least reduce your debts.
3. Get Constant Reminders
Clearing a debt is never a walk in the park and therefore requires discipline. Do whatever it takes to reduce that debt.
Alarms and calendar reminders will keep your mind triggered about your financial goals.
4. Have an Emergency Saving Plan
Emergencies occur without warning. You are bound to have bills and expenses for which you were not prepared. Financial difficulty can come suddenly through illness and any number of unexpected events.
The only way to be ready is by having an emergency savings fund. Otherwise, emergencies will get you into more debt.
5. Say no to Credit Cards
Currently, almost every adult owns a credit card. Most credit card holders do not understand that these cards are a form of a loan that they will have to pay with additional interest.
Use cash where possible to avoid adding credit card debt on top of your other financial obligations.
6. Make Minimal Monthly Payments on Time
Make sure to make minimum monthly payments for every debt on time. This practice will save you from being charged higher interest rates and penalty fees.
Start with cards charging you the highest interest rate and then move on to the others.
7. Negotiate with Creditors
Debts with high-interest rates will take you longer to clear. Customers with a good credit history can successfully negotiate with creditors about reducing the interest rates.
8. Seek the Help of a Credit Counselor
Consult a credit counsellor if your financial situation gets out of hand. Non- profitable credit counsellors will not charge anything to help reduce your debts.
They will assist you to assess your financial situation, create a budget and set a plan on how to get back on track financially.
9. Reward Yourself for the Achievement
Paying off debt should not be a chore. Make it a game, whereby you reward yourself every time you hit a significant milestone. This will motivate you to do even better.