It might seem counter-intuitive, but if you’re wealthy and paying off your home you’re likely to be in serious debt. The latest stats from the Australian Bureau of Statistics (ABS) show 29% of households are overindebted. Worryingly, almost half of us with a mortgage (47%) are struggling under the weight of repayments and a quarter of high-income households have too much debt. Sydney and Melbourne have the highest debt stress.
If this sounds all too familiar, there are plenty of ways to get those debts under control for good. The strategies that will work will depend on your age and where you’re at in life. In most cases, the idea is to knuckle down and plan to pay the debt off as soon as you can. You may have to make some sacrifices along the way, but every dollar you pay is a dollar that goes toward funding your future financial independence.
Let’s get started
It can be tough understanding how to navigate your finances when you’re in your first job or buying your first car or home, especially if you weren’t taught personal finance fundamentals at home or at school.
Gianna Thomson, a principal financial planner at Thomson Wealth, says at this stage of life it can be a good idea to stay away from credit cards and buy now, pay later services such as Afterpay and Zip Pay.
“If you do need a credit card, have a small limit of no more than $2000. Always try to keep a cash buffer to use instead of paying for things with a credit card. I don’t have a credit card and use my Visa debit card for internet purchases,” says Thomson.
Donna Sgangarella, managing director at FinFit Wealth Solutions, says although your 20s should be a time to set goals and spend smartly, all too often people in this age bracket have big personal debt. It’s usually a mixture of credit cards, personal loans, car loans and buy now, pay later services.
Esta historia es de la edición November 2019 de Money Magazine Australia.
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Esta historia es de la edición November 2019 de Money Magazine Australia.
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