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Start the New Year With a Bang: How to Get Finance-Ready

By Bessie Hassan | Money Expert at finder.com.au | Exclusively for Debt Help 24/7

The New Year represents a time of reflection, and a time to make better decisions across all facets of our lives, including money. Instead of dwelling on the financial mistakes or hardships we've encountered in the year that's gone by, it's time to look forward and think about our financial outlook.

Nearly one in three Australians (32.4%) have defaulted on their credit card repayments, according to a new finder.com.au analysis which surveyed 2,005 Australians. A total of 17.5% of Australians have missed one credit card repayment, while a further 14.9% are repeat offenders and have missed more than one repayment.

When it comes to servicing other forms of personal debt, 14.4% of borrowers have defaulted on a personal loan, while 10.3% of borrowers have fallen behind on their home loan repayments.

It appears men and women are better at servicing different financial products. For credit card repayments, women come out on top with 19.9% never missing a credit card repayment compared to just 11.8% of men. However, women are more likely to miss a mortgage repayment more than once at 7%, compared to men at 5.5%.

This research highlights a problem area for managing and servicing personal debt, so here are some ways that you can better handle your debt in the New Year.

Consider Your Need for Debt

The holiday period is associated with greater spending and clocking up additional debt, and while taking out an extra credit card or loan may seem like the best way to manage the rise in costs, you should review your need for debt before doing this.

Can you dip into your savings to fund the cost of Christmas this year? Are there other ways that you can boost your income? Could you raise funds by switching to a more affordable utility or phone provider? How about refinancing your mortgage to get a better interest rate? There are many ways you can increase your savings to help pay your way through the festive season, so consider all your options before taking on more debt.

If your only option is to take out further credit, compare your options carefully to make sure you're getting a competitive rate and features.

Understand Your Debt and Financial Outlook

Knowing where you stand in terms of debt is a good way to get a view of your financial position so you can make better money choices. If you don't know have your credit file or credit score on file, access it online to get a feel of where you're at in terms of your personal finances. Check your file for any defaults or red flags which may indicate that you need to take better care of your financial accounts.

For example, if you've missed more than one credit card repayment, you may decide to take action by conducting a balance transfer with a 0% purchase rate so you can focus on servicing your debt during the promotional timeframe.

Merge Multiple Debts

If you're falling behind on different financial products, debt consolidation may be a useful strategy. This means you can combine multiple debts into one loan for one convenient repayment, and these types of loans normally attract a lower interest rate.

You may want to apply for a debt consolidation loan to merge two separate personal loans or perhaps you'd like to roll debts into your home equity.

Debt consolidation can help you to lower your interest costs and fees associated with having multiple accounts, however just make sure you research this strategy before deciding whether it's the right path for you.

Look Out for High Rates & Hidden Fees

When comparing any financial product, observe the interest rate and the major fees associated with the product. Online forums, calculators, and comparison tables can help fine-tune your options when deciding which type of product to go for.

For example, if you're comparing 0% purchase rate credit cards, keep an eye on the revert rate and any annual fees that apply, as you don't want the benefit of the 0% rate to be outweighed by high account-keeping fees. Some revert rates can be as high as 20% while annual fees can range from $50 - $150 depending on the card issuer.

Don't Be Loyal if It's Costing You Money

The best way to save money is to ask, and shop around:

  • If you have an inkling that you could score a better financial deal, chances are you probably can.
  • If your home loan provider is offering a special discount to new customers, ask them if they can match this rate on your account.
  • If you've been a long-term customer, ask your bank for a cheaper interest rate as they'd probably prefer to give you a rate discount than lose your account altogether.

As we head towards the festive season, it's easy for our personal finances to take a hit. To avoid things getting out of hand, and to start the New Year in a strong financial position, take a strategic approach to your money management so you can reap the long-term benefits of being financially independent.

If you have any questions or want to find out in more details how we can assist you in managing your debts simply call us on 0753431189 now or fill in the form at the top and one of our consultants will contact you at a convenient time.