These tips and strategies will help you to pay off your personal debts, so you can jump off the rental roundabout and buy your own home!
1. Consolidate
If you’re having trouble repaying a myriad of debts, a consolidation loan may your best bet. According to Australian Debt Reduction, one of the most effective ways to get out of debt is to consolidate your loans into one single monthly payment. “A debt consolidation loan is the replacement of multiple loans and debts with a single personal loan,” they advise. “This means you will only have one repayment and, if some of the debts you are replacing are credit card debts, the interest rate on the consolidation loan may be lower, saving you money.”
2. Cut the commute
If your commuting costs are rising and your salary is staying flat, then perhaps it's time to re-evaluate the real cost of getting to and from your job? A train or bus pass can set you back $30-$50 per week, and the same goes for the cost of petrol, road tolls and running your car. If you move closer to your job or find a way to car pool, you could save yourself upwards of $2,000 annually – which can go straight towards paying off your personal debts.
3. Eliminate your highest debts
You may have several debts including credit cards, personal loans and overdrafts, each with their own varying interest rate. So, it makes sense to manage your debt by eliminating your higher interest debt, suggests Fix Symes Debt Solutions. “This does not mean getting rid of your credit cards; this means shopping around for better products in the market,” they advise. “Don't settle for a credit card charging 25% interest when you can have a credit card charging 10% interest.”
4. Refer a friend
Many employers offer a “referral bonus” as an incentive to staff members, if they refer a prospective employee who gets hired. This can range from a few hundred bucks to several thousand dollars, depending on your industry. Check with your human resource manager to see if such a program operates in your workplace, and then keep a lookout for potential prospects!
5. Direct your savings towards your debt
Most of us like the idea of having some savings in the bank, so you have a nest egg to deal with emergencies or unexpected expenses. But before you can really save, you must eliminate your debts, reports Fox Symes. “If you save money in a savings account you will earn around 6% interest. Even if you invest in stocks and shares the average return year-on-year is between 10% and 11%. You pay more than that for debt,” they explain. “Interest rates on credit cards and personal loans can be as high as 20% or more. So if you are keen to eliminate your debts, consider using your savings to pay them off. Lump sum payments can effectively reduce your debts by reducing the principle, and thus reduce the interest.”