Paying off your debt in 2020
Bessie Hassan, money expert at Finder, shares her tips on paying off your debts in 2020....
The festive season has come and gone for another year. Sadly, that means we wave goodbye to secret Santas, eating too much and that extra glass of wine here and there.
As we welcome 2020, it’s back to reality, and for a number of women out there, that can mean another year of trying to regain control over demanding debt.
Research by Finder shows that one in three Australians (37%) will be starting 2020 with debt carried over from last year. This can be overwhelming and make your other goals for the new year seem so much further away.
But debt does not have to define your new year, and you often have a lot more options available to you than you might think. Take a look at these tips to get you started on your journey to a debt-free 2020.
Review your spending
This may seem like a bit of a no-brainer when it comes to debt, but most of us aren’t doing it enough. Regularly assessing your spending habits will help you cut out non-essentials, leaving you with a bit of extra cash to help get on top of those repayments.
The money you save from these spending revisions can give you the option to repay more than
the minimum, which will save you money over the lifetime of your loan, provided your lender
allows for this.
It’s important to remember these changes don’t have to be forever, but swapping your favourite store-bought coffee for an instant one in the office for a few months now can put you in a better position in the future.
Consolidate your debt
Debt consolidation is a great option if you are paying off multiple loans at once. This involves moving your debt to a 0% balance transfer card or taking out a separate debt consolidation loan.
A 0% balance transfer gives you the option to move your current credit card debt to one with 0% interest. This is typically as part of an introductory offer on the card and will last for a limited period of time, so be sure to be aware of those terms to avoid a higher interest rate later on.
Alternatively, a debt consolidation loan involves taking out a separate personal loan with a lower interest rate and using those funds to pay off existing debts. In doing this, you are then only making one repayment, which will carry a lower interest rate.
As with any financial product, it is really important to consider your own personal situation when weighing up your options. What is right for someone else, may not be the best for you so as always, doing your research will pay off.
Prioritise your payments
Take some time to look through the repayments you’re making and prioritise, prioritise, prioritise! This is one of the best ways to regain a feeling of control over your debt.
When you know what you have to pay off and how long you have to do it, it becomes much easier to manage your payments.
If you’re a visual person like me, making a list, calendar or other visual representation of your debt can be really helpful. It means you’ll have a holistic view of all your repayment commitments.
This can protect you from nasty late fees and help you decide if there are debts that could be moved to a cheaper rate. By prioritising, you’ll be able to figure out where you can and want to make higher repayments to get your debt paid off quicker.
When it comes to debt, it can become easy to feel like it’s hard to stay afloat, but this doesn’t have to be the case.
Taking the time to evaluate your position and consider all the options available to you can remove a lot of the anxiety that comes with debt.