How to avoid Debt
Chances are you are reading this article because you require some financial assistance and need some extra cash to help you quickly pay off a debt. You’re not alone. In June 2011, it is reported that Australia’s national credit card debt is almost $50 billion dollars.
If you are in the fortunate situation where you do not yet require any assistance in the form of instant payday loans, then we have some tips for you on how you might avoid getting into debt in the first place so that you don’t need to take out a quick cash advance in future.
Let’s discuss further how to eliminate debt in an effective and practical way:
Firstly, cease or avoid from acquiring new debt. Some people keep adding on to their existing debt. They continually use credit card to purchase and to finance things with money that they don’t have. According to the Reserve Bank of Australia, the average credit card debt is $3321 which is about $50 in interest per month. Stop paying interest! Quit using your credit cards. Always bear in mind these few points:
- You don’t need credit cards for a safety net
- You don’t need credit cards for convenience
- You don’t need credit cards for rewards schemes.
Secondly, if you do happen to have multiple debts you need to pay, pay off the debts with the highest interest rate first. It’s better in the long term to pay off the debt which has the highest interest rate as quickly as you can, as the high interest rate will only increase your debt the longer you leave it and increase your chances of debt spiralling out of control. If you are able, pay more than the minimum amount to pay off the balance quicker and save on interest. Making extra repayments means you will accrue less interest over time.
Thirdly, try to save as much as you can. Put away at least 10 percent of your income into a high interest savings account which can be used as an emergency fund for any unexpected expenses so that you can avoid taking out unnecessary emergency cash advances. If you think you will be tempted to use that money, it’s best to put the money in an account which you can’t readily access via the ATM. This lack of convenience to the money is a helpful tip for those who are easily enticed with impulse spending.
