Debt, when managed responsibly, can be used to help adapt to changing life circumstances. But letting it getting out of hand can happen to the best of us.
Debt is a fact of life for some Kiwis – whether it’s getting into your first home or a car that suits your family situation. And as life progresses, your debt may grow, and keeping on top of it can be tricky.
So how do you go about nipping debt in the bud?
So why do we have debt? It’s simple. The cost of the great New Zealand dream is growing, and things like housing, investments or major purchases (like cars) are often beyond the means of many savings accounts.
But with bringing major purchases forward comes a responsibility to service the ongoing repayments. When coupled with your other debts, it can become difficult to control, picking up interest and charges along the way, and making securing your financial situation more of a headache.
Forget the quick-fix solutions. Unfortunately, there’s no magic wand that’ll make debt disappear in an instant. However, there are a few tried-and-true ways that can help you get started.
See what you spend your money on.
Go through your statements with a fine-tooth comb and figure out a budget based on where you can cut back.
Pay your bills on time.
Avoid paying late fees that can bump up your balance even more.
Put in more than the minimum repayment.
It could be $10 or $100 - either way it’ll help you avoid paying extra interest in the long run.
List your debts and make a plan.
Jot down how much you owe next to each debt. Then, set up a realistic payment plan.
If you’ve got a mixed bag of debt and administrating it is becoming a challenge, you might like to consider consolidating them into a single personal loan. Instead of juggling several loans at once, you’ll have one regular payment, one interest rate and one balance to keep an eye on. There’s less paperwork to worry about, just one provider to deal with and a fixed date for the debt to be done and dusted. It’s a great way to simplify your finances, and it might just help you get a good night’s sleep.
Things you need to know
This information is general in nature and a guide only. It does not take into account your personal financial situation or goals. Click here for Latitude Financial Services Limited QFE disclosure statement under the Financial Advisers Act.