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articles: Fighting the Debt Demons

If you are like most Australians, then managing your debts is probably something that you keep putting off. Most of us just get another loan or another credit card when finances are a bit tight. A large number of people find that this is not an effective solution. While in the short-term bills get paid – in the long run you can get yourself further and further into a deep dark hole with no way out.

Do not wait until you hit the wall with credit cards and no one will lend you any more money. If creditors are calling and you do not call back - it is probably time that you quit hiding, and start dealing with your debts face to face. There are steps that can be taken to assist you in managing your debt, and clearing your name from the creditors phone list once and for all. The first thing you must do is develop a budget. This is a key part in eliminating debts and learning to live within your means. A budget is the first step to taking control of your monetary position.

With a budget you examine and document all your expenses and all your income and if (like many) you spend more than you earn – this will be your first problem. Expenses need to be prioritised into essential and optional. While you must pay your mortgage or your rent in order to have a place to live, holiday airfares are optional costs and should only be incurred if you can afford them.

The second thing you can do to reduce your debts is to increase your monthly payments on credit cards. When making more than the minimum payment, a greater sum of money is applied towards the overall account balance. In the end, this will cost a person less money in interest. If you add just a few extra dollars each payment, the number of payments of each loan or credit card can be decreased.

See if you can reach an informal payment agreement with your creditor rather than go into hiding. The sooner you let your creditor know that you are having difficulties meeting your set repayments, the better off you will be. Many credit companies will work with you to help as they would rather get their moneys later than not at all.

Another option is Debt Consolidation. Having numerous high interest loans, high interest bills or credit cards causes you to spend more money for the items that were purchased then they were actually worth. If you are a real estate owner, think about Mortgage Refinance or a home equity loan. This will enable you to pay home loan interest rates on all your debts and therefore reduce your monthly repayments. Perhaps you should consider Credit Counselling. This is especially useful if you are not a home owner and the standard Mortgage Refinance is not an option.

Most credit counseling services assist you in coming up with a logical option for eliminating debt. These organizations can provides a variety of services such as, debt managing advice, and classes and workshops aimed towards money management, debt consolidation and budgeting. Another Option is signing a Formal Debt Agreement with your creditors whereby they agree to accept from you less than the monies you owe them and in smaller installments than set out in your original credit contract. However Debt Agreements are reflected on your credit history and will prevent you from being able to obtain unsecured loans in the future.



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