How to Get out of Debt – and Stay there

How to consolidate and reduce debt

“Debt consolidation is key to survival!”

If you have several store cards, accounts, credit cards and personal loans, then you’re always robbing Peter to pay Paul.  To reduce your overall debt, your first step might be to consolidate.

Compare Credit Cards – search online for sites that help you compare the credit card risks. Checking balance transfer options, annual fees, interest rates, interest free days etc.  Some options are Credit Card Offers, Money Manager/Credit Cards and Credit Card Finder.

Consolidate and reduce your credit card debt by switching to a card with interest free period on balance transfers and residual low rates and fees (see option 1 below).

How to Get out of Debt

Option 1:

• Find a credit card provider who will offer you a zero or low interest rate on transfer of balances from other credit cards.  Of course, be sure to check what the conditions are, how long the introductory offer is good for and what the interest rate will be thereafter. If you do your research, you can probably find one that will give you low interest for the life of the debt. Sounds much better than just say 6 months and back up to ~20% interest (which is what got you into trouble in the first place).
• Going forward -> Change your mindset – pay with cash!

Option 2:

• If you have multiple store cards and credit card debts, list all your (and your partners?) debts in a file or spreadsheet, in order of smallest to biggest.
• Pay the minimum monthly commitment on all of them.
• Which is smallest?  Throw any extra, expendable cash at the smallest first, to clear it off the list as fast as possible.
• Move onto the second smallest and do the same.
• Continue until all cards and debts are ZERO.
• Going forward -> Change your mindset – pay with cash!

Reducing your debt that way, whilst it may sound hard, is really quite rewarding. You don’t mind skipping on buying yourself those new golf clubs on credit, once you see how you can quickly reduce your credit card debt instead…

Living within your Means

Read more tips on breaking the credit cycle: Staying On Budget – How to live within your means

Where to Get More Advice

If you’re unsure which is the best path for you to clear debt, consult a financial planner.  If you don’t know of any financial planners, ask your friends and work collegues, maybe someone can recommend someone to you?  As well, many AMP representatives will see you for free to offer a little advice.



Best of luck,

Nathan