Australia is a nation of spenders and borrowers, not savers and investors. The concept of ‘living within your means’ used to be the simple way of life, these days however Australian households spend over $10 billion more than we earn each year.
It is not hard to see that we are raking up debt. So where does the money come from? It comes from borrowing unsecured credit. Whilst in previous generations people were forced to save for what they wanted, our generation want to fulfill their wants there and then. With the offer of easy unsecured credit, personal debt levels are going through the roof.
With Australian credit card debt is hovering around $4,000 per person, there are more personal bankruptcies and there are more people relying on welfare than ever before. It is clear that many people do not have clear and effective rules around budgeting, saving and spending.
Most people don’t lack the motivation to spend and borrow less, – to save and invest more just seems so complex and difficult. It is not just credit cards that are getting out of hand. Store cards, personal loan and even loans to cover your burst water pipe are readily available.
Working out finances can be scary and even difficult, reducing personal debt can be damn right overwhelming. It is our aim to simplify that – to make saving and investing as easy as spending and borrowing. So easy that anyone can use the information to build wealth for life.
Australia is one of the richest countries in the world yet most Australians are struggling to convert that wealth into financial freedom.
Are You Financially Literate?
To get ahead Financially, you need to know exactly how much you earn and how much you spend – on EVERYTHING!, before you spend it. Preparing a budget can help with this part.
You also need to understand the terms and conditions of your spending. Sure the Credit card may offer 55 days ‘free’ money, but what happens after? Did you know that if you don’t pay off your credit card in full there is a certain order the banks allocate your repayments? And did you know that if you are only paying the minimum repayments, you will end up paying back double if not more of the debt you borrowed? Do you know the fees and charges that come with your credit facility?
If you answered no to these questions I urge you to go and find the answers.
The scary side of consumer debt like credit cards and store cards, is that people don’t really know how much they owe, what the terms and conditions are, what the interest rates and fees and charges are that they are paying.
Knowing this information can be fundamental to taking control of these debts.
On most of these cards if you were to pay the minimum interest you are going to stay in debt for life. It is just the way they are designed. So the longer you are holding these debts, the more money you will be throwing down the drain.
So how can you stop this bleeding?
Let The Debt Termination Begin
First start with negotiating better rates. Do your homework and negotiate with the banks. As they want to keep you as their customer they tend to be able to give better rates if asked. Especially if you can present them with a better deal you found elsewhere.
Then note down your minimum repayment amount. Is there any extra cash you can commit to this repayment? If so make the change. If not, even paying it fortnightly instead of monthly would help!
Set this new payment up as an automatic deduction. Make it happen. BECOME THE MASTER AND STOP BEING THE SLAVE!
Learnt the exact steps to get rid of your debt in our Let’s Get Debt Free Masterclass!
DISCLAIMER: This article provides general information. It is intended for educational purposes only and is NOT intended to constitute personal financial advice or taxation advice. It simply describes what has worked for the author. It is not intended to influence you to make a decision in relation to a particular financial product.