Struggling with debt?
Are you struggling with debt or wondering what you can do to improve your credit health?
Read on for 8 tips on how to get out of debt faster and where to seek help if you’re having financial difficulties or need to apply for financial hardship assistance.
For information on what you should know before locking yourself into ‘bad or no credit loans’ or the impact of a default on your credit report, see the below links:
8 tips on how to get out of debt faster
- Sell household items you no longer need or use
Online sites such as eBay, Gumtree and Facebook marketplace are all great places to sell unwanted items that can bring in some handy cash.
- Cut down on luxuries or convenience items such as takeaway meals etc
Even without drawing up a budget, just by cutting down on the number of takeaway coffees or lunches, taxi trips, drinks on the weekend, movie nights, film or music streaming subscriptions, and other luxuries can help you make some serious savings.
- Pay more than the minimum on your credit cards to reduce your interest payments
Even if you cover the minimum repayment on your store or credit cards, the remaining balance will still be accruing interest. So, if you pay off more than the minimum, you’ll not only be lowering the balance but effectively reducing the monthly interest payments as well.
- Consider taking on a second job or making money out of your favourite hobby
If you have a particular skill and you’re able to take on a casual or part time job, or you have a hobby that creates a saleable service or product, then why not use that to earn some extra cash? But keep in mind you’ll need to consider whether that extra income is taxable or could impact any government benefits you get.
- Seek free, professional financial counselling
There are many free financial counselling services who offer reliable, professional counselling services to help people in financial difficulties, such as National Debt Helpline. ASIC's MoneySmart website also contains a list of free counselling services
- Do a self-audit of your monthly expenses and see where else you can save
Sit down (with a financial counsellor if you need) and create a daily expenses diary. For a month, list every item you spend money on, including monthly bills, to paint a clear picture of where your money is going each month. Then highlight all the areas where you have either bought stuff you probably didn’t need, or areas where you could make savings in the future.
- Design yourself a weekly budget... and stick to it
Using your expenses diary, create a weekly budget of all the necessary payments that you expect to make and work out how much you can realistically live on each week – and then stick to that budget as closely as you can. There will always be unexpected expenses, but if you stick to your budget as closely as possible you should be able to handle the unexpected costs without too much trouble.
- Negotiate hardship assistance with your credit providers
If all that doesn’t help, and you’re struggling to make your payments, credit providers, utilities and telcos are required to look at varying account arrangements if a customer asks for hardship assistance. Most companies in these sectors have dedicated hardship officers who are there to help out. This will give you breathing space to take practical steps to get back on track with your credit health.
Help is at hand
Whatever the reason you find yourself with financial challenges, help is usually at hand. It could be from your credit or service providers, free financial counselling, or community and government organisations.
Banks, financial institutions, utility and phone companies are required to assess you for a ‘hardship assistance’ if you ask them for help. Most have a dedicate hardship team who are there to assist. If you’re not happy with their response you can lodge a complaint with the industry’s ombudsman or complaints scheme.
Depending on your circumstances, a credit provider may agree to change your payment terms to give you more time to pay, or to reduce what you are required to pay. This may help to get you back on track.
Learn more about financial hardship
Free financial counselling services are available to help if you’re having financial difficulties. Experienced counsellors work in community organisations such as the National Debt Helpline, and provide advice about credit and debt issues, and strategies for overcoming financial difficulties. They’re free, independent and confidential. ASIC's MoneySmart website has a list of free counsellors around Australia.