Feeling discouraged and overwhelmed by debt is a feeling that many Australians experience. And things don’t get by any chance easier when you want to make ends meet, and your income is limited. Unfortunately, there’s always the temptation of agreeing to high-interest loans, assuming that it’s a temporary solution. But, in the long term, making rushed financial decisions will jeopardise your chances of accumulating savings. So, if your question is how to erase debt, keep on reading.
Prioritise your payment plan
Considering that you have limited income, you should start by prioritising your expenses. Bear in mind that necessities such as utilities, unpaid federal taxes, student loans and others should be in your focus. As for credit card debt, this is a common concern for many Aussies as well.
First of all, target the card that has the highest interest, and focus on that if your debt enables you. But, most importantly, you should start budgeting and distinguishing between urgent debt and the debt that can wait.
Consider negotiating for a lower rate
Our next tip on how to erase debt is embracing negotiation. Of course, you know how much you owe your creditors. But it wouldn’t kill you to try discussing with them about lowering the interest rate. Many times, lenders are more than willing to negotiate; it’s up to you to try.
Factor in debt consolidation
Taking on debt consolidation can be the right strategy if you have multiple credit cards and loan bills that confuse you. Instead of having numerous bills and payments on your mind, you could pay a single, tidy bill.
The most considerable advantage to debt consolidation is that, if you have fewer creditors to pay, you’ll manage to make repayments in time. That is crucial for improving your credit score. Plus, it might simplify your finances, on the whole.
There are cases in which lenders or brokers provide you with attractive interest rates. Nonetheless, do bear in mind that if you’re paying less than the total amount of bills combined, you might have exceeded the repayment timeframe. Make sure you don’t agree to that unless it’s what you want.
So, debt consolidation can be the answer to how to erase debt.
Avoid taking on other loans
Did it ever occur to you that the reason why you’re in debt is that you depend on credit cards on a regular basis? So, if you want to learn how to erase debt, it makes sense to analyse your spending habits and see where most of your finances go. If you reckon that your weakness is utilising credit cards on a whim, you should acknowledge the downsides of such cards and try to address the problem.
We hope that you found our tips on how to erase debt handy. Bear in mind that after you have managed to become debt-free, you should be mindful so that this doesn’t change overnight. One thing is for sure: debt can be managed even with limited income, it is up to you to embrace the right tactics.