If you’re still in debt, read our tips on How to Get Out of Debt first

Champagne lifestyle on a beer budget

“It’s all about mindset and discipline!”

Don’t continue to live outside your means.  Set yourself a budget and stick to it.  Be realistic about what you can and cannot afford.

• Write yourself a realistic budget (there’s heaps of free templates online to help out). Make sure the household is all on board with the changes.
• Bills BEFORE entertainment.
• If you can’t be trusted, cut up your credit cards.  And let’s face it, if you could be trusted, you wouldn’t have gotten into financial crisis to start with.
• Buy only the things you can afford – “If you can’t buy it with cash, you can’t buy it”.
• Use layby terms for items you haven’t got the immediate cash for.
• Use interest free credit on bigger ticket items. Again, only if you can be trusted to pay it off BEFORE the end of the interest-free period – and if you then close the account immediately after (there may be annual fees, account keeping fees – or the temptation to once again splurge).
• Set up an interest bearing account that you cannot get access to offline, with a small amount or percentage of your wage to go into it weekly. Feel free to start very low and build up the weekly deposits as you get used to the idea.

The old habit of spending everything you earn might be a little hard to break at first, but once you take hold of the new mindset, you’ll be surprised at how easy it becomes.

Life doesn’t have to be boring

“What to do whilst spending less money?”

Think up new and exciting ways to provide entertainment that are cheap or free, like having friends over for a BBQ, rather than always heading out the pub.

Take it in turns to host card or board game nights (which you may think sounds lame, but perhaps that’s why alcohol was invented?).

Rent a DVD instead of heading out to the movies is a cheaper option – or go on cheap@ Tuesdays or to the independent cinemas who charge half the price of the big guns.

Eating out? Don’t be embarassed to use discount shopping vouchers – and find local restaurants that have cheap nights and 2-for-1 offers.

Where to Get More Advice

If you want more advice on saving and clearing 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

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