Wake Up From Your Debt Denial and Fix it!
Debt has a funny way of striking without notice. Early warning signs are a real luxury and the only way to get a grip on debt before it cripples you is to be honest with yourself about your financial situation, now.
Dollars and Sense website reports: “The ratio of personal debt to income in Australia is one of the highest in the world — higher even than America and the UK. For every $100 we earn, we owe $130. Credit and charge cards account for $40 billion of the debt.”
Are you having trouble keeping up with your credit card bills, loans and mortgage?
When are you in debt?
You’re in debt the minute you spend more than you earn. Mortgage and car repayments aside, what other debts are you servicing? Furniture, a plasma TV and last year’s family vacation are probably, but shouldn’t be on the list. If they are, the reality is, you’re living beyond your means. Make the money before you spend it, even if it takes longer to get the things you want.
When are you in denial?
You’re in debt denial when you struggle make the minimum repayments on your debts and loans and continue to live a king’s lifestyle on a beer budget. It’s possible to live like this for quite some time, and even get another credit card approved to ‘help’ you cope with being short on cash in the short term. If you’re in or bordering on this situation, you’re close to tipping over the edge and letting debt get on top of you.
Immediate steps
Use Nab’s debt consolidation calculator to reduce your monthly payments, and interest by consolidating your debts into a single loan.
ANZ has a good credit card repayment calculator that lets you plan your repayments and shows you how long your debt would take to service.
Finally, create a realistic budget you can stick to. You can download a free budget spreadsheet for excel which will help.
Long term
Of course, once you’ve come to terms with your debt and start to service and manage it better, the long term solution is to change your spending habits so that it doesn’t happen again. Speed up your debt repayments by selling some of those things you bought that you really, couldn’t afford. It’s tough, but so being chased after by debt collectors.
You can list personal items such as clothing, accessories and homewares on ebay.com.au — known as the ‘garage sale’ of the world, you’ll be surprised at the sorts of things people buy. Alternatively, advertise a garage sale in your local paper and be ready to purge yourself of some things you really don’t need, and turn them into cash.
You can even try listing specialty items on www.gumtree.com.au, either way, make sure to take good photos of the items you’re selling and write clear descriptions, it will help you sell the item faster if people know what they’re buying. Don’t forget to set a reasonable price for the item and be prepared to negotiate. You’re bound to loose on second hand goods but your mission is to turn those things into cash and repay your debt faster.
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