How to dig your way out of debt
There are a million different reasons why you are in debt, but only one way to get yourself out of it.
It’s time to take back control of your finances, no matter how impossible that task might feel.
First and foremost, you must make a commitment to getting out of debt: you are your own worst enemy. If you can’t afford it, don’t buy it. And while a budget is an excellent idea, the key is making sure it is realistic. Remember, paying off a debt will take time and patience but it will be worth it.
The next step is to list all your debts, no matter how small. Write them down in a spreadsheet. From there, look at how much interest you are paying and be prepared to negotiate with your bank for a lower rate. Considering a 0% balance transfer is only a good idea if a) you aren’t going to be tempted to use the new card and b) you can pay the total amount off during the interest free period.
Now it’s time to pay down your debt. Before you get started, there are two main strategies to consider.
This strategy is for people who struggle to stay motivated and need small wins to stay focused. Make the minimum repayments on all your debts, except the smallest. This debt is where your attention lies. Pay as much off it as you can each month until it has been paid in full. Celebrate, and move on to the next debt. The sooner you pay off those smaller debts the sooner you will feel more in control of your finances.
The avalanche method is more about math than your feelings. If numbers motivate you, then this method is for you. Work out which debt has the highest interest and focus on paying that off first, even if it is the biggest debt. If you can stick to it, this method will save you money on interest in the long wrong.
Successful Ways offers fun and interactive Wealth Creation Course, you’ll learn successful wealth accumulation strategies, how to make your super work harder for you, strategies to (legally) reduce your tax, how to build wealth with real estate and more.
Save 50% on course tickets with promo code: SW50BLG
Join our newsletter
If you enjoyed what you read, please consider sharing. We'd like to know what to focus on in the future!
Share this article
Five reasons why you should be saving more for retirement
While many people think superannuation is just something their employer pays into a fund for retirement, there’s a bit more to it. And while...Read More
Why more Australians are using mortgage brokers
According to new data, 43% of Australians aged between 25 and 45 are going to see a mortgage broker first when buying property. CoreData’s new “Evolving Great...Read More