Tag: debt help

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Tips Credit Card Consolidation No Credit Check Loans

10 Simple Habits to Build Financial Discipline in 2024

10 Simple Habits to Build Financial Discipline in 2024

In today’s fast-paced world, cultivating strong financial habits is essential for achieving long-term stability.

Whether you’re aiming to buy a home, eliminate debt, or gain more financial independence, the ability to build financial discipline is crucial for reaching your goals.

This article will explore ten simple habits that can help you manage your money more effectively, improve your savings, and ensure you’re better prepared for unexpected expenses.

10 Simple Habits to Build Financial Discipline in 2024

1. Create a Budget and Stick to It

The foundation of financial discipline starts with knowing where your money is going. Create a realistic budget that covers all your needs and sets aside a portion for savings. Ensure you review your budget regularly and adjust it as your situation changes.

 

Create a Budget and Stick to It

2. Prioritise Needs Over Wants

It’s easy to get carried away by impulse purchases. To build financial discipline, prioritise your needs over your wants.

Before buying anything, ask yourself if it’s essential or something you can live without for the time being.

3. Set Clear Financial Goals

Setting both short-term and long-term financial goals gives you something to strive for. Whether it’s paying off a credit card, building an emergency fund, or saving for retirement, having goals keeps you focused.

4. Track Your Expenses

Use apps or spreadsheets to track your daily spending. This habit can help you identify areas where you might be overspending and allow you to make adjustments before it becomes a problem.

5. Automate Savings

One of the easiest ways to ensure you save consistently is by automating your savings.

Set up a system where a percentage of your income is automatically transferred to a savings or investment account. This way, you’re saving without even thinking about it.

Start a savings habit, this will help kickstart your savings journey and maintain a consistent savings routine.

6. Avoid Lifestyle Inflation

As your income grows, it’s tempting to increase your spending.

However, resisting the urge to inflate your lifestyle is a key habit for building wealth. Try to maintain your current lifestyle while using any extra income to pay down debt or invest.

7. Build an Emergency Fund

Life is unpredictable, and having an emergency fund can save you from financial ruin during unexpected events like medical emergencies or job loss.

Aim to save at least 3-6 months of living expenses.

8. Limit Credit Card Usage

While credit cards can be convenient, they can also lead to debt if not used carefully.

Develop the discipline to only use credit cards for planned expenses that you can pay off in full each month.

9. Review Your Finances Regularly

Set aside time each month to review your financial health.

Assess your savings, track your progress on financial goals, and identify any areas where you might need to cut back or make changes.

10. Invest in Financial Education

The more you know about managing your finances, the better equipped you’ll be to make smart decisions.

Invest time in reading books, attending workshops, or listening to podcasts that focus on personal finance and wealth building.

Building financial discipline doesn’t happen overnight, but by adopting these habits, you can steadily improve your financial situation.

Whether your goal is to pay off debt, save for the future, or simply gain more control over your money, the key is consistency and patience.

Start implementing these habits today to start building financial freedom in 2024 and beyond.

Invest in Financial Education

 

 
 
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Tips Credit Card Consolidation No Credit Check Loans

How to Improve Your Credit Score Before Applying for a Loan

How to Improve Your Credit Score Before Applying for a Loan
When planning to apply for a loan,

Your credit score plays a significant role in determining your eligibility for loans, influencing both approval chances and the terms you’re offered.

If you’re planning to apply for a loan, improving your credit score beforehand can help you secure better interest rates and repayment terms.

Here’s a step-by-step guide on how to boost your credit score before applying for a loan.

How to Improve Your Credit Score Before Applying for a Loan

1. Review Your Credit Report

Start by obtaining a copy of your credit report from a reliable credit reporting agency. This will help you understand where you stand and identify any inaccuracies that may be affecting your score.

Tip:
If you find incorrect information, file a dispute with the credit reporting agency to have it corrected. Even small errors can have a significant impact on your credit score.

What to Check For:

Look for any late or missed payments

Identify any debts that may have gone to collections

Spot any errors in your personal information or credit history

How to Improve Your Credit Score Before Applying for a Loan

2. Pay Off Outstanding Debts

Paying off outstanding debts is one of the most effective ways to improve your credit score. Focus on reducing high-interest debt first, such as credit cards, as these often contribute to a lower score.

  • Debt Reduction Strategies:
    • Prioritise high-interest debts (such as credit cards)
    • Make consistent, on-time payments
    • Consider consolidating multiple debts into one manageable payment
  • Tip:
    If you have trouble managing multiple debts, consider debt consolidation to simplify repayments and potentially reduce your interest rates.

3. Make Timely Payments

Your payment history accounts for a large portion of your credit score. Consistently making payments on time will gradually improve your score, while missed or late payments will lower it.

  • How to Stay on Track:
    • Set up automatic payments or reminders to avoid missing due dates
    • Prioritise at least the minimum payments on all accounts
    • Catch up on any overdue accounts as soon as possible
  • Tip:
    If you’re struggling with making timely payments, speak to your lender about setting up a payment plan. This can prevent further damage to your credit score.

4. Lower Your Credit Utilisation Ratio

Your credit utilisation ratio is the amount of credit you’re using compared to your total credit limit. Ideally, you should aim to keep this ratio below 30%.

  • How to Reduce Credit Utilisation:
    • Pay down balances on your credit cards
    • Ask for a credit limit increase (but avoid spending more)
    • Avoid maxing out your credit cards
  • Tip:
    Pay off a portion of your credit card balance before the statement date to lower your utilisation ratio and improve your score.

5. Avoid Applying for New Credit

Each time you apply for a new line of credit, it results in a hard inquiry on your credit report, which can lower your score.

Try to limit the number of applications for credit cards or loans while you’re working to improve your credit.

  • Tip:
    Focus on managing your existing credit lines responsibly rather than applying for new credit during this period. Too many applications in a short time can signal financial instability to lenders.

6. Keep Old Credit Accounts Open

The length of your credit history also impacts your score. Even if you’ve paid off a credit card or loan, keeping the account open can work in your favour, as it shows a longer credit history.

  • Tip:
    Use old credit accounts occasionally to keep them active, but be sure to pay off the balance to avoid debt accumulation.

7. Consider a Credit-Builder Loan

If you have a low or limited credit history, a credit-builder loan could be a good option. These loans are designed specifically to help you improve your credit score.

As you make regular, on-time payments, your credit score will gradually increase.

  • Tip:
    Be sure to choose a lender who reports to all three major credit bureaus, so your positive payment history helps improve your credit score.

Improving your credit score before applying for a loan can help you secure better interest rates and more favourable loan terms.

By focusing on paying down debt, making timely payments, reducing your credit utilisation, and avoiding new credit applications, you can boost your score and put yourself in a stronger financial position.

Remember, improving your credit takes time, so start working on it well before you apply for a loan.

Consider a Credit-Builder Loan

 

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Debt Management Tips

5 Common Debt Management Mistakes and How to Avoid Them

Common Debt Management Mistakes
Managing debt is a critical aspect of financial well-being

Managing debt is a critical aspect of financial well-being, yet many people find themselves stuck in a cycle of debt due to common mistakes.

If you’re looking to regain control of your finances, avoiding these frequent pitfalls is essential. 

Let’s explore five common debt management mistakes and how you can sidestep them to achieve financial stability.

5 Common Debt Management Mistakes and How to Avoid Them

1. Paying Only the Minimum Payment

One of the most common mistakes people make is paying only the minimum amount due on their debts, particularly credit cards.

While this may seem like an easy way to manage monthly expenses, it often leads to prolonged debt and a significant increase in interest paid over time.

How to Avoid It: Make it a priority to pay more than the minimum payment whenever possible.

Even an extra $50 per month can significantly reduce the overall cost of your debt. Consider creating a repayment plan that focuses on paying off high-interest debts first to save on interest charges.

Paying Only the Minimum Payment

2. Ignoring the Total Cost of Debt

Many people focus solely on monthly payments and overlook the total cost of their debt, including interest rates and fees.

This tunnel vision can lead to a false sense of financial security and make it difficult to recognise the long-term implications of your debt.

How to Avoid It: Always consider the total cost of your debt before making financial decisions.

Use a loan calculator to understand how much you’ll pay in interest over time and explore options for reducing that cost, such as refinancing or consolidating high-interest debts.

3. Taking on More Debt to Pay Off Debt

Taking on new debt to pay off existing debt—whether through loans, balance transfers, or credit cards—can create a vicious cycle if not managed carefully.

This strategy might offer temporary relief, but it often leads to even more debt if you don’t address the root cause of your financial issues.

How to Avoid It: Before consolidating or transferring debt, develop a realistic plan to pay it off.

Ensure that the new debt offers better terms, such as a lower interest rate, and commit to not accumulating additional debt while paying off the existing balance.

Focus on living within your means and budgeting effectively to avoid falling back into debt.

4. Failing to Prioritise Debt Repayments

When managing multiple debts, it can be easy to lose track of which payments should be prioritised.

Without a clear repayment strategy, you may end up making minimal progress on all your debts or even missing payments.

How to Avoid It: To avoid common debt management mistakes, adopt a structured repayment plan, such as the debt snowball or debt avalanche method.

The debt snowball method involves paying off your smallest debt first, which can provide a psychological boost as you eliminate each debt.

On the other hand, the debt avalanche method prioritize debts with the highest interest rates, helping you save money over time.

Choose the method that best fits your financial situation, and stick to it consistently to avoid falling into debt management traps.

5. Not Seeking Professional Help When Needed

Many people struggle with debt management alone, feeling too embarrassed or overwhelmed to seek professional advice.

This can lead to missed opportunities for better financial solutions, such as debt consolidation, negotiation with creditors, or even debt relief programs.

How to Avoid It: If you’re feeling overwhelmed by your debt management mistakes, don’t hesitate to seek professional help.

Financial advisers, debt counsellors, and other professionals can offer valuable insights and guidance tailored to your specific situation.

Many organisations offer free or low-cost services to help you create a manageable plan and get back on track.

Managing debt requires a proactive and informed approach.

By avoiding these common mistakes—such as paying only the minimum, ignoring the total cost of debt, taking on more debt, failing to prioritise payments, and not seeking help when needed—you can create a solid foundation for financial freedom.

Remember, the key to effective debt management is having a clear plan, staying disciplined, and making informed decisions. Take control of your finances today and set yourself on the path to a debt-free future.

If you find yourself struggling to control your debts, a certified specialist at Australian Lending Centre could provide Debt Management.

Our proven system has helped thousands of Australians to turn their finances around.

Not Seeking Professional Help When Needed

Categories
Short Term Loans

5 Benefits Of Short Term Loans

benefits of short term loans
benefits of short term loans

Taking a loan isn’t proof that you aren’t administrating your finances well or that you aren’t earning enough money to support your family. A loan is a great method that offers you a way out of a problem! In this article, we discuss the benefits of short term loans.

A short-term loan solves the issue immediately and without all the fuss that comes with larger loans. If you need the money to pay for medical expenses, house reparations or an unplanned trip visit to your family, that’s what short term loans are all about!

5 benefits of getting short term loans

They are manageable!

You can take a $500 loan and that’s it! Small loans were made to fix urgent matters, so take advantage of them! Short term loans won’t keep you up at night thinking how you’re going to manage interest rates and any other additional fees.

Unlike large loans that pose problems and can disrupt your finances, a small loan will help you out. Not being able to make payments on time and worrying about a bad credit score won’t be an issue when you deal with such short-term loans.

Online application

This is one of the biggest benefits of short-term loans. You can fill out a form on the Internet and wait for the money. Skip the road to the bank office and staying in line for hours. This type of loan comes with an online application that will only take you a few minutes of your time while doing it in the comfort of your own home.

Access the funding fast

Skipping the fuss that comes with larger loans also means getting the money faster! This is actually the exact purpose of short-term loans. They have been created for urgent matters that can’t be planned ahead. In just a couple of hours, you can receive the money and sort out your financial difficulties! It’s that simple!

You can customise your payment plan

You can borrow only the money you need, considering that a short-term loan doesn’t come with a fixed sum of money. If you think you’ll be able to pay it back in 3 months, settle a 3-month payment plan. If a 5-month plan sounds better, go with that option. A customisable payment plan allows you to get back on your feet without worrying that you won’t be able to repay the sum in the given period. You choose what’s best for you.

Dealing with a short term loan is easier

Taking a loan isn’t always a burden, especially if you borrow a small amount. Repaying a small loan in a couple of months can be entirely possible for your budget. So, you’ll be able to get out of your financial difficulty, and you won’t have any debts.

Short term loans are a great option to quickly get you back on track- that is of course if you don’t have significant debt. Of course with any loan it is important to take precaution. If you have any questions about short terms loans, read 5 questions to ask when applying for short term loans.

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News Short Term Loans

Afterpay and the rise of Buy Now, Pay Later Services

Afterpay and the rise of Buy Now, Pay Later Services

Whenever you’re in a store and you see something that you’d love to buy, but your wallet is empty, you get full of frustration. You would do anything to get the necessary money, only so you can purchase the product before it’s out of stock. You’re not alone. A lot of individuals are experiencing this.

Since buy now, pay later services have been invented, people can get what they want, while not paying the full price from the get-go. Doesn’t that sound awesome?

Such services like Afterpay have risen, and millennials are loving it. While this might seem like a good option, it might not always be the wisest thing to do, especially if you have no plan on how you’ll pay the rest of the money.

Here’s what you need to know about Afterpay, and the growth of buy now, pay later services

Buy Now, Pay Later Services – What Are They?

Buy now, pay later services represent an option you have in stores when you want to buy a product, yet you don’t have enough money for the full price at that moment. Such a service allows you to submit to a plan where you pay part of the price at the beginning, whereas the rest will be paid in instalments over a certain period of time.

Usually, the buyer receives the product before making the full payment, which is something that attracts many individuals. Not to mention that the trend is extremely popular among millennials, as young people have fewer chances to receive a credit card – thus, they have to resort to other solutions. In certain situations, it’s a very convenient option.

The Rise of Buy Now, Pay Later Services

Since not all people meet the requirements for credit cards, the rise of buy now, pay later makes sense. Basically, these services let people buy something without making an upfront payment, or without having upfront interest or fees. For this reason, we are seeing millennials rush to use Afterpay.

With the rise of Afterpay, we are seeing a lot of younger consumers utilising Buy Now, Pay Later services. The Australian Securities & Investments Commission has declared that the number of people using this method has gone from 400,000 to 2 million. This boost occurred between the financial years 2015-2016 and 2017-2018.

What Is Afterpay?

Afterpay has become the most popular choice of service for Australians.  As mentioned it is a buy now, pay later service that allows you to pay for something in four instalments. This allows you to buy a product or use a service without having to provide full upfront payment.

One of the major appeals to using these Buy Now, Pay Later services is the fact that there is no interest charged. As a customer, you are required to pay for your purchase in instalments for about 56 days. Whilst no interest is charged, you will have to pay a late fee if you miss payments. Timely payments will grant you access to a free service.

Late payments

Buy Now, Pay Later services such as Afterpay are generating their revenue from customers who are late with their payments and merchant fees. In fact, 17% comes from late fees, and the rest comes from merchant fees.

The service has made a reputation ever since May 2016. It was able to raise $25 million through shares. It’s market capitalisation was of $165 million, after selling more than 15% of their equity. Afterpay makes sure to give the retailer all of their requested amount upfront, to assume the non-payment risk that may come with some customers.

Although Afterpay was launched only 3 years ago, 16,500 Australian retailers offer it as an option. Moreover, 10% of customers in Australia are using the service. Its success is undeniable.

Is it worth it?

Buy now, pay later services can be very convenient. They guarantee that you can purchase a product in time, before it sells out, even if you don’t have the whole amount of the price. As a consumer, this is really appealing.

At the same time, Buy Now, Pay Later services can be detrimental to your personal finances. Many young Australians are overspending and paying for products that they simply cannot afford. If you continue to miss payments, you can also receive a default on your credit file. Unless you clean your credit, you may struggle to secure a loan in the long run. Whilst alternative lenders offer support for people with bad debt, it is better to prevent this from happening early on.

The key to using Buy Now, Pay Later Services such as Afterpay is to come up with a plan, budget and make sure that you’ll be able to pay off all instalments in time. Not doing so will end up costing you more than you want to, and you’ll only deal with debt afterwards.

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Fast Loans

Discover The Fastest Ways to Repay Loans

Fastest way to repay loans
Check out these tips on the fastest way to repay loans.

Paying your loans off in small amounts can be easier on the wallet in the short term, but in the long run, you’ll end up spending more and being burdened with debt for longer.

Learn the fastest ways to repay loans below and reap the benefits!

Here are some tips for paying back your loan faster

1. Pay more

If you can afford it, make larger monthly payments to pay off the principal more quickly.

For example, a $2500 fast loan with 6.8 % interest and a 10-year payback period would cost $28.8 a month. Making $70 monthly payments instead of $28.8 enables you to repay the fast loan in just over 36 months.

By paying the principal more quickly, you will also pay less on interest.

2. Make additional payments

The less you owe, the less interest that you will be charged. By budgeting effectively or receiving a bonus from work, you may be able to make additional payments to your fast loan.

3. Create a clear plan

Creating a clear plan is one of the simplest and fastest ways to repay loans.

  1. Start by understanding exactly when your loans will end or if it’s a credit card, then check the current balance.
  2. Next, create a goal to pay it off within a specific period of time. You’ll need to understand exactly how much money to put aside each week to achieve this.
  3. Commit to your plan and you’ll have a clear pathway to becoming debt free ahead.

Make it a routine to pay it off monthly. If you’re facing difficulty in coming up with the monthly payments, create a budget and cut back on your expenses. This way, you can lift your debt obligations off your shoulder faster than ever.

4. Automate savings

Automatically transferring money into alternative accounts is a great way to save extra cash. Rather than spending money on trivial things such as movie tickets or unhealthy meals, automatic payments can help you set aside that extra cash to pay off your debt. 

Make sure you will only use that account to repay your fast loans and other types of debt. This will require sacrifice in certain areas, but it will ensure you are one step closer to financial freedom.

Hide your credit card in a safe place

Don’t be a victim of credit card theft. With easy access to your credit cards via pay pass; strangers who have access to a lost credit card can easily tap on purchases less than $100. Keep your credit card securely in your wallet. If you lend your card to friends or family, make sure you keep track of any transactions online.

Keep your phone in your pocket. 

The same rule applies to your mobile phone. With the rise of Apple Pay, you can purchase your transactions through your mobile phone. Make sure that you keep your phone locked with a passcode so that strangers cannot make any payments without facial recognition or a passcode.

5. Close some credit cards

Having them in your wallet may tempt you to spend more. Leave only the low-interest credit cards for your urgent needs.

6. Consolidate your debts

One of the best ways of ensuring that you continue to pay off your loan quickly is to consolidate your debts into one neat and tidy bundle. This will also protect you against the rising interest rates across different loans. This will benefit you in the long run; whilst making it easier to manage your debts.

7. Be proactive by increasing your income

Earning cash while dealing with your debts is a good way to stay proactive about overcoming debts. You don’t only generate wealth to pay for your loans; you also build your nest egg. If you can put away $100 every month out of your income, that would be $1,200 in annual savings.

At the Australian Lending Centre, we can clear debt management plans to help you move towards a financially secure life. It takes discipline and planning, but you can surely do it.

Warning About Borrowing

Contact Australian Lending Centre to get back on track. 

Categories
Financial Fitness

Saving Money On a Lower Income

saving money on a lower income

There is a range of strategies you can employ to make saving money o. One of the major areas that can save you a lot in the long term is debt consolidation. There are also some other lifestyle choices you can make to improve your financial situation.

Many people think it is all too hard, but everything you do will help, even small changes can make a huge difference. We can all employ a range of measures that will prevent budget blowouts without sacrificing all the things you like doing.

If you are finding yourself on the roller coaster of no savings, bad debt management, poor (or no) budgeting and everything is a bit chaotic, Australian Lending Centre has some tips and tricks to get you out of bad debt employing activities such as debt consolidation, saving and feeling in control again.

First things first – Where Does Your Money Currently Go?

If you don’t yet have a budget, keep a financial diary for your pay period and track how you are spending your money. The Money Smart website offers a great money tracking app to make this easier. This will give you valuable insight into your habits and areas you can save.

  • What are you spending your money on?
  • How much is left over at the end of the pay period?
  • What money needs to go out on payments and bills?
  • Are there any areas of waste or unnecessary spending?
  • Are there areas where you are going backwards and getting into arrears?

Planning and Budgeting  – Where Will Your Money Go?

Once you have a record of what your current spending entails, get online to the Money Smart website and complete the budget tool. Be sure to include all your debts, payments, bills, and income. Mark payments and amounts in your calendar.

Most bank online apps have the ability to schedule payments, so they come out when they are due, but if these are also in your calendar you won’t get any unexpected payments coming out. These regular payments can including things like:

  • Mortgage or rent
  • Car payments, car registration and insurance
  • Household/health insurance
  • Credit card payments
  • Loan repayments
  • Store card payments
  • Afterpay/ZipPay (remember that defaulting on these can effect your credit score)
  • Utilities such as gas and electricity (you may want to discuss bill smoothing with your provider – this is a regular payment over time rather than a massive and shocking bill each quarter)
  • Internet and phone

Bad Debts? Talk to the Credit Provider

The bottom line is that companies want to be paid. They are always receptive if you explain your situation, especially if you have, or are, experiencing financial hardship.

You may be able to negotiate with them to reduce or put a hold on payments until you get back on top of things. Of course, you still have the pay the money back, but a hiatus on payments can help in the short term.

Some credit providers will allow you to reduce the final figure if you can pay the debt outright. If they offer this, it may be time for debt consolidation. If you are too overwhelmed by the phone calls and letters, then talk to us about negotiating on your behalf.

Next Steps – Take Control With Debt Consolidation

When loans and credit cards get beyond what you can cope with in terms of interest and late payments, it might be time to call in help from the experts. Companies like Australian Lending Centre can offer a solution for a bad credit debt consolidation loan.

This is where you negotiate with lenders for a reduced payout figure and then apply for a single loan that will cover all your bills in one payment with a lower interest than general credit cards and late payment fees.

Having one simple debt consolidation loan payment to go out eat pay period is going to be a lot easier than trying to remember everything. The sooner you simplify your payments, the sooner you will be in an easier financial situation.

Money-Saving Tips

Turn off the TV

Are services like Netflix, Foxtel, Stan, Hayu and the iTunes store getting beyond ridiculous? Try cutting out all but the most popular one, to cut back.

Turning off the TV will also help cut back on power and expose you to less spend-inducing ads. You might also have app subscriptions that you don’t need. Although these are small they can add up in a month.

Stop Hoarding and Start Selling

If you have closets full of unwanted clothes, try selling them online. A good clean out also helps you to see what your wearable wardrobe looks like so you can plan your clothes shopping to maximise your shopping budget.

Also if you buy anything make sure it goes with the other items in your wardrobe. Take advantage of sales, why pay retail when most clothes will go on sale towards the middle of the season.

Look for those habits that add up

You can cut back on your habits, such as drinking alcohol during the week, smoking (probably goes without saying but your health and budget will thank you), buying coffees, can all save a surprising amount as well as having general health benefits.

Limiting your drinking to the weekend can save hundreds a month, depending on your drink of choice. That bottle of wine after work at $15 a night can really add up over the week. Similarly, a $4 coffee each day is $20 a week. Make coffee at home in a keep cup and save money and the environment.

Stop using your credit card

By switching to using your debit card or cash for purchases, you will be more aware of your spending habits. It will also prevent the slide into bad credit debt.

Be frugal at the supermarket

Most of the time, buying in bulk or larger sizes are cheaper over time, so check on the prices for the larger sizes. Don’t shop with kids. Pester power is a thing and can increase your spend at the checkout. Never shop when you are hungry. Buy less meat, which is expensive, and opt for more meat-free alternatives, such as tofu, beans, and pulses.

Eat Smarter

With a busy life, planning meals can be a real chore, but while using services like Uber Eats seems like a good alternative, you are actually paying $5 on top of takeaway prices and it really can add up at the end of the pay period. By shopping in bulk, cooking healthy meals and taking the leftovers to work for lunch, you can save quite a lot each day.

Are You Missing Out On Government Payments You Are Entitled To?

Lastly, make sure you check all your entitlements with regards to government payments. As a low-income earner, you may be eligible for some form of financial support if you aren’t already receiving a government benefit.

When every dollar counts it’s worthwhile claiming all you can. To check on payments and entitlements, check out the Department of Human Services. Even a small additional payment may ease your financial burden. Living on a low income is hard, but these payments are designed to help.

Small Changes with Big Returns

Once you have a clearer picture about where your money goes, you make changes to your lifestyle and start on the path to greater financial control, the happier, healthier and less stressed overall you will be.If you need help with debt consolidation, please get in touch. We’d love to hear from you.

Note: This information is general, and doesn’t take into account your specific personal and financial circumstances.

Categories
News

Factors to Consider before Signing a Debt Agreement

Part 9 Debt Agreement||Debt Agreement||part 9 debt agreement

A debt agreement is a contract that is legally binding between you and the parties concerned – the creditor, debt collection company or third persons involved. Consequently, each party can legally enforce the terms of the agreement against you if you don’t comply with your contract. Learn about the things to keep in mind before signing a contract that can make or break your finances. Always take serious consideration before signing a debt agreement.

The debt agreement process

When entering into a debt settlement, you have to understand that the creditor expects you to be ready to pay your debts. So, prepare to negotiate a certain sum of money or asset to pay for a percentage of your combined debt. Make sure that you can afford to pay it over a limited period of time. In debt settlement, you don’t pay your creditors directly. Instead, you make repayments to the administrator of your debt agreement.

Negotiation takes a little bit of patience and persistence because creditors also know that once they agree to a particular amount, they cannot recover the full amount of debt anymore. Knowing that they cannot get back the full amount you owe, they may give you a hard time during the negotiation process.

Legalities of your debt agreement

A valid contract is an agreement where all the parties agree to it. Meaning, there is mutual consent between you and your creditor. It must state the object of the contract—or the consideration which is typically a sum of money, or asset paid by the debtor to the creditor. The agreement must not allow you to do something illegal in return of debt forgiveness or reduction of penalties. It is also important to be mentally capacitated to enter into an agreement. You must be mentally sound and at least 18 years old to ensure that you are competent enough to enter into a binding agreement.

negotiations

It is important to note that the object of the contract or the “consideration” must be something to be negotiated upon. An agreement is impartial. It gives you the perfect opportunity to discuss and compromise on the terms of the debt agreement before reaching a final contract that is acceptable to you and your creditor. But, take note that there are non-negotiable contracts, but you can still look for ways to ensure that the terms will be satisfactory not only to your creditor, but to you as well.

The agreement must not contain provisions that disagree with the contract laws in your state. You can talk to an attorney to verify the terms of your contract before signing it. Or, you can educate yourself and check whether there are illegal terms in the contract that will jeopardize not only your finances but your reputation as well.

Negotiation points

Write down your objectives for entering into an agreement. What is your desired outcome? Do you want to pay your debts in full while paying for it at a lower rate? Or, do you intend to let go of your assets to finally eliminate your debt? Before you negotiate a contract, have a specific outcome in mind. For example, if you want to extend the loan term, then you should know exactly how long you would like the loan extension to be.

Before beginning negotiations, you should know where you stand. Are you financially capacitated to respect the terms of the contract? Take note of your financial standing and the surrounding circumstances that may prevent you from abiding by your agreement. It is also important to determine your bottom line. Know the highest repayment amount you can make and the lowest one that you think the creditor can accept.

check-options

Check other options

Do you think it’s time to give up and take up bankruptcy instead? If you have no income, and you’re not in any way capable of making even the minimum repayments because of unemployment, and you can’t meet your daily needs, maybe bankruptcy is a better idea. But, it will definitely ruin your credit score, take away your assets—and probably leave you on the streets. The only upside is that your debts will be eliminated.

If you think you can still get a job, improve your business or get any additional source of money to keep up with a minimum payment each month, debt agreement is a better idea.

It is important to note that debt agreement does not refer to debt consolidation. When you consolidate loans you simply roll your existing debts to a new loan; with lesser monthly repayment, lower interest rates and fees and in one easy payment method each month. While debt consolidation companies sometimes negotiate with creditors to lower the repayment each month, there are companies that simply pay off all the loans and charges a new rate to their customers.

Is debt agreement the right solution to your financial situation right now? Talk to us today!

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Debt Consolidation

Is Debt Consolidation better than Bankruptcy?

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When you have a lot of debts with different interest rates, the first thing you will think of is debt consolidation. However, there are certain situations when debt consolidation doesn’t make the cut and other options seem more feasible. Is bankruptcy one of them?

We will compare two financial services—debt consolidation and bankruptcy—and see which one is better for your situation. Note that before you request these types of financial services, you will need to contact an expert to get an idea of what to expect and whether it is a good idea.

Debt Consolidation

Debt consolidation is a great tool you can use to save money and leave your credit rating unaffected. Debt consolidation will transform all your debt payments into one payment. This method’s idea is to lower the monthly payment and interest rate.

You can consolidate your debts through a secured or an unsecured loan. This service requires a certain fee but in the end, you might save more money than before, and you will regain control over your finances.

Here are the pros of Debt Consolidation:

  • Your credit rating and reputation are protected. Your credit score won’t be affected, and you won’t be bankrupt, meaning that your financial status won’t be made public. Bankruptcy records are easy to find and view, and this kind of reputation can affect your future financial endeavours.
  • You can simplify your debts. This means that you will focus on one payment with one interest rate, but you will also get to pay every debt in one go. In other words, you will no longer have to worry about missing a payment or paying it later than usual and suffering the penalties.
  • Unlike other services, debt consolidation will also let you keep your credit cards.

Cons of Debt Consolidation:

While debt consolidation is an excellent method of regaining control over your debts and economy, you could end up paying more in hidden fees and even lose the property. Here are some things to consider:

  • Hidden costs: Many people don’t consider the loan term. When you apply for debt consolidation, you will pay less every month and have a lower interest rate, but the loan term will be increased. If you stay in debt for an extended period, you may end up losing more money in the long run.
  • Losing property: If you default on your loan, you can lose your car or even your house. Depending on the agreement you signed with your lender, you might end up losing a lot more than just money if you default on your consolidation loan.

Bankruptcy

Bankruptcy should only ever be considered as a very last resort. You can eliminate certain debts when filing for bankruptcy. Here are a couple of positive things that bankruptcy brings:

  • When you file for bankruptcy, the creditors cannot harass you or take legal action against you. That means that you also are protected against foreclosures or repossessions.
  • Back to square one: Bankruptcy will eliminate most of your debts, and you can get a fresh start. Depending on your financial situation, you can even keep your car and home and pay them at a reduced rate.

The Negatives of Bankruptcy

Like any other financial service, bankruptcy has negative factors that you need to consider before applying. Here are a couple of things you should check:

  • Credit rating: Your credit rating will be lowered depending on the type of bankruptcy you apply for and your situation. Your credit report will show the bankruptcy for anywhere from seven to ten years. Of course, you may already have bad credit, seeing that you owe a lot of money and are bankrupt because of it.
  • You can have a fresh start once you receive your bankruptcy discharge, but until then, you will have trouble with lenders and other financial institutions.
  • Your reputation: Your employer or people who are associated with you business-wise can easily discover bankruptcy.
  • Financial sacrifices: You will have to sell your possessions if you want to be eligible for bankruptcy.

In the End

So, is debt consolidation better than bankruptcy? It really depends on your situation and what you want to achieve, but yes. Debt consolidation is a financial solution that can have a positive impact on your life, whereas bankruptcy comes with serious drawbacks.

If you want to learn more about the benefits of debt consolidation call us on 1300 138 188 or visit the Australian Lending Centre for expert advice.

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News

Variable-Based Tips On How To Manage Your Debt

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If you’re planning to get a new loan, but you’re not sure if you can repay it on time, here are tips on how to effectively manage your debt, based on 2 financial variables.

Financial success does not depend on the amount of money you have but on specific strategies that apply to your situation. Whether you will use the funds for personal or business purposes-increasing your cash flow is still vital to a successful debt management plan. Debts may increase or decreases depending on your strategy, in the same way as your spending habits influence your cash flow.

You cannot just say that you are going to pay back your debts without some detailed strategy.

The first thing that you can do to manage your debt is to improve the variables that eventually determine your financial capacity to repay. Improving these 3 variables about your debts you will increase cash flow and pay off your debts and improve your finances.

Earnings

How much is your after-tax net income? What about your after-debt repayment income? When computing your free-money, look into your debt to income ratio first.

Your debt income ratio refers to a certain percentage of your monthly gross income that you use to pay debts. It has two classifications: The front-end ratio, or the percentage of income you use to pay for your mortgage, rent, property taxes and other similar housing costs. Second, the back-end ratio, which is the percentage of your income that you pay for all your personal loan and credit card payments and other recurring debt payments, including those covered by the front-end ratio. As long as it is recurring debt, it is still covered by the back-end ratio.

To calculate your debt-to-income ratio, add up all your monthly debt payments. Divide that number by your current monthly income. Get the percentage by multiplying the result by 100. Let’s say if you spend $1000 each month on debt and have a monthly income of $4,000, your debt to income ratio would be 25%.

Increasing your income and at the same time paying your debts can help you lower your debt to income ratio, giving you higher free cash for your other needs. You can also increase your debt payment to quickly pay off your debts until you achieve a zero-debt ratio.

Financial satisfaction

Are you satisfied with your present financial situation? Or, do you find it difficult to meet your monthly payments on your bills?

How much money is enough and well-enough for you? What might be enough to pay all your debts may not be well enough to sustain your lifestyle, pay for your emergency and daily needs and invest for the future. Or, it could be sufficient for you as long as you plan your budget wisely.  Decide how much might be enough for you and your family if you have one to know what number you should definitely try to reach.

Discover more tips on how to manage your debt by talking to our in-house loan experts at Australian Lending Centre today!

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Debt Consolidation

When Is a Debt Consolidation Loan Feasible?

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Debt consolidation loans are meant to pack multiple small loans into one that is more manageable. It is one of the most common forms of debt relief. However, not many people seem to know when a debt consolidation loan is feasible.

There are some things you must take into consideration when you’re tempted to amass your loans into one.

So when is a debt consolidation loan feasible?

  1. When you pay extremely high-interest rates

Credit cards, usually, have the highest interest rates. When you need to pay a lot of interest, the debt is growing at an alarming pace, faster than you can repay it. Debt consolidation loans, on the other hand, might offer you better interest rates altogether. If you pay more than you can afford in interest, you should definitely consider a consolidation loan.

  1. An endless number of bills

Getting tons of bills can make it so easy to forget to pay a certain debt. You simply cannot keep track of everything. A consolidation loan is feasible if you’re in such a situation since you’ll be receiving just one bill until you’ve dissolved your debt. This will automatically lead to better management of your time and money.

  1. When the loan is unsecured

If a loan is “unsecured,” it means that it is not attached to any of your assets, like your house and car. Secured ones are certainly not a good idea because if you fail to repay the debt, you could get homeless or devoid of the asset you’ve secured the loan on. Try to stay away from secured loans at all times. It’s just better to find another way to pay your debt without risking your house as collateral.

  1. When you’re willing to repay for a longer time

Debt consolidation loans allow you to pay less than you paid on your previous debts, but that means that the repayment is going to take longer. Are you willing to do that? This can be a hassle for some people who want to get it over with as fast as possible. Still, if you have no problem with that, then you should consider taking such a loan.

  1. When you don’t end up paying more interest

Yes, it is possible to end up paying more interest on a consolidation debt than you would’ve paid for all the other separate loans. Surely, that will impact your credit score if you fail to pay. And before you know it, your credit rating will be so damaged that you will find it even harder to get another loan in the future.

Debt consolidation loans can truly be a great help, but you must know when you need them. Moreover, there are many other aspects that come into play, like the ones mentioned above. So, review your situation thoroughly before you take such a debt consolidation loan because it can have disastrous consequences if you go for it lightheartedly.

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Debt Consolidation

Are You Falling for these Debt Consolidation Traps?

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Do you feel burdened by several credit card debts and other outstanding loans and you think debt consolidation could provide some serious relief? Debt consolidation is a new loan that allows you to pay off your multiple balances in one monthly payment. It doesn’t erase all your debts but simply makes it easier for you to repay. So, if you want to have a clean slate for keeps, make sure that you don’t fall into these debt consolidation traps:

Ignoring the cause of your debt problems.

Debt consolidation helps people manage the repercussions of bad debts. But it is just a temporary solution to your problem. Addressing the root cause of your debts, such as your lifestyle, money-management issues and other related things can help you analyze why you sunk in debt and how you can get out of it.

It is important to ask yourself, “What got me into a pile of debt?” Remember that it takes a while before debts become unmanageable. It is almost impossible to come up with a quick solution to internal debt issues when you fail to see where and how it started.

Debts did not grow overnight so unless you come up with a concrete idea with what got you into a financial mess, the same situation is likely to repeat itself.

Australian Lending Centre has in-house professionals to help you in retracing your financial actions. We can help you with our debt management plan and debt consolidation loans to deal with your present debts as we help you identify your spending habits.

Perhaps you were taking high-interest loans without knowing it or you are not paying your loans right. In other cases, the problem could be as simple as forgetting the due dates or the existence of debts itself.

Not making a proactive effort in searching for the best consolidation loan.

Here are some factors that you need to consider when choosing a loan consolidation program:

    • all of your outstanding debts
    • interest rates
    • lenders’ willingness to negotiate a lower rate
    • consolidation options

Consolidating debts has its own implications. Some lenders offer rates and fees that creep up over time. Others will charge you hefty fees that may put your assets in line in exchange of deceiving interest rates.

Australian Lending Centre gives you different options to pay for your debts. If you want to pay a lump sum to settle all your debts for less than what you actually owe, we can help you do that. You can also talk to us about our debt management program and see whether or not it can work for you. A debt management plan usually involves making an agreement with your creditors to consolidate the full amount of your loans. The negotiation is successful if you get lower interest rates or longer repayment period.

Thinking that you are finally out of debt.

Debt consolidation is still a loan. While you no longer have to deal with angry collection calls and you are not pestered with high-interest credit card bills, you cannot go back to your old habits. One of the big debt consolidation traps is forgetting he your debt problems were caused in the first place. Avoid falling back to maxing out your credit cards once again. Don’t give in to the temptation of charging all of your credit cards with zero balances once again, especially if there is no urgent need to do so.

Bear in mind that you still have a substantial amount of outstanding debt. So, if you cannot close most of your credit cards leave them at home and put only your low-charging credit cards in your wallet for emergencies.

Call us today!

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Debt Help In The Farming Industry

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Farmers often go into debt to help keep their farms running. Like many other businesses, the farming industry depends on the availability of funds to borrow to get them through tough times and also help them grow when times are good. Just like everyone else, farmers can fall on hard times and have trouble paying their debt. In this case they will have to seek debt help in some form.

Understanding debt obligations and what debt can do for the farming industry is crucial to its business outlook in the medium and long term. An important point to know is how debt and equity differ from each other. Debt has lots of demands that come with it while investor equity is less likely to cause a business financial strain.

When farmers do decide to take on debt it should be used to increase productivity. If the debt payments cannot be made out of profit from the debt then the payments will have to come from other profits. Since profits from farming vary significantly it can make it hard to predict when the payments for debt will come directly. The debt might be investing into something that takes a season or even years to create a return.

It is important to make sure that there will be cash flow to make debt repayments. If a farm was to take on too much debt too early and the cash flow gets tight then it might make it hard to make debt repayments and it could actually ruin the business.

Farmers also need to factor in that the prices for the goods they need fluctuate quite a bit as well. A sharp price increase in something vital for a farm can cause cash flow problems that can put a farmer’s finances in the red.

Debt Help In The Farming Industry

Once anyone is behind on payments it can be hard to get debt help. Not only farmers but any business can struggle to get an outside investor to step in and save their business when their books are out of order. They might have to start selling assets to get their books in order before they can get debt help. A farm is run basically like any other business and the farming industry uses loans to help grow and expand. Knowing how to use debt help responsibly is as important as any other factor in the farming industry.

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News

Reserve Bank Urges Australians to Avoid Panic

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Despite the many impending pressures imposed by the Global recession, the Reserve Bank remains optimistic about Australia’s financial future.

Rising unemployment, pricey living costs, increasing household debts; it all seems bad news for Australian household budgets. However the Australian Reserve Bank Governor Glenn Stevens urged consumers to have “quiet confidence” about their financial future.

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Financial Planning

Retirees Struggle with Finances

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A recent survey has shown that one in four self-funded retirees has been forced to return to the workforce as a result of their shrinking retirement funds. On top of this, retirees are looking to cut spending, accept a lower standard of living, sell assets, cancel travel and recreational activities, or delay retirement altogether.

The survey shows that four in ten have lost more than $100,000 in the market downturn. More than one in ten have lost half of their invested wealth (excluding unlisted property).

As a result, 26% of retirees have been forced to get a job or are planning to do so simply to make ends meet.

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Refinance and Refinancing

Aussies in Debt

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December 2009 was the largest monthly spend by Australians in history, increasing the average credit card balance to $3,250. The majority of Australians are well aware of the risks involved in leaving credit card debt unpaid. A popular solution to credit card debt is to consolidate your debts into one loan. Aussies in debt is a growing concern, if you are struggling with debt try consolidation.

Over the recent holiday period, Australians demonstrated their confidence that we are coming out of the Global Financial Crisis (GFC) fairly unscathed. This was evident by the December spending peak of $22.02 billion, which was a vast jump of $2 billion from November.

On the average debt of $3,250, credit card spenders making minimum repayments of $100 will take years to repay their balance. However, Australians can save themselves on interest repayments by comparing rates to get the best deal. Another popular credit card debt solution is a consolidation loan. They are perfect for those who need to consolidate multiple credit cards, store card debt and personal loans and can drastically reduce the amount of interest you pay. 

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Debt Management Credit Card Consolidation Financial Fitness

Don’t Carry Debt in an Economic Downturn

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economic downturn

Currently we are facing an economic downturn. In the final quarter of 2008 there were 1,991 debt agreements signed. According to ITSA this figure is up 37.12% on December 2007. This figure illustrates the increased number of Australians’ who are facing financial difficulty.

Carrying debt in a downturn can be more dangerous than ever. Predominantly people are getting themselves into financial difficulty through the use of credit cards and personal loans. According to Chris Riotto, Managing Director of Australian Lending Centre;

“In a downturn, it is more important than ever to seek debt advice. An increasing number of Australians are having to cope with a reduced income or unemployment, doing this with substantial debts can be particularly difficult, that is why I stress the importance of seeking advice at the earliest possible sign of trouble”.

Chris Riotto CEO ALC

A professional can assist you in sorting your financial troubles by analyzing your current situation, setting financial goals, and assisting you in achieving them. In some cases people may only need to cut back on their current expenses whilst others may need to look at debt solution products, either way, the sooner you get professional help the quicker and easier it will be to get your debts under control.

Assess your Debt in the Economic Downturn

Fido is currently advising consumer’s of the following:

“Ignoring debt problems will makes things worse. Interest will probably continue to be charged on top of the debt and any possessions secured against the debt (e.g. your car) may be repossessed and sold. Also, your credit rating is likely to be affected and you might be sued.”

Fido

It is often a good idea to question your financial situation, sooner rather than later. If you can answer yes to any of the below questions, it may be time for you to talk to a debt advisor.

  • Do your monthly expenditures exceed your monthly income?
  • Does your credit card balance feel like it never decreases?
  • Are you finding it difficult to save a regular monthly amount?
  • Do you need a loan to pay off your debts?
  • Have any of your creditors been in contact with you regarding the payment of your debts?

Readjusting your current spending patterns could significantly help to get you out of a poor financial situation. The Australian Lending Centre knows all about debt and have helped many Australians with financial problems. Australian Lending Centre provides a free, confidential service to all customers, call us on 1300 138 188. We offer effective debt management solutions to become debt-free.