Managing your debt

Debt can be a wonderful slave but an unforgiving master.

Australia, in common with many other countries, is experiencing an extraordinarily high level of consumer debt.  Many consumers don’t think twice about the cost of putting more and more on their plastic.  After all, everyone is doing it, so it must be OK!

Properly managed debt can be a great tool.  Most people need it to help purchase their first home and other necessities in life.

It is also very important in investment planning, enabling you to purchase income producing growth assets, such as shares or property, to boost your long-term wealth.  In this case the interest may also be a tax deduction.

The problem arises when debt is used for basic living costs or purchasing depreciating assets.  It is further aggravated when the interest rate being paid is too high and there is no planned debt reduction program in place.

Credit card interest can be up to 18% and, much to the glee of the banks, many customers only pay the minimum amount and get further and further into debt.  Finance company interest rates may be even higher: up to 28% or more.

If you’re not paying off your credit cards in full every month, have other high interest loans, or your current level of debt is keeping you awake at night, you need to seriously consider your financial direction.

Follow this simple plan and take control of your debt, before it takes control of you!

1.    Restructure your debt by consolidating what you owe at the lowest available interest rate.

2.    Seek professional help from a financial adviser to plan your financial goals and how to achieve them.

3.    Prepare a budget to ensure your cost of living is within your means and put a debt reduction program in place.

4.    Keep to your budget and pay off your credit card in full every month.

5.    Save first to buy consumer goods such as furniture, household goods, holidays and similar items, rather than putting it on credit.

All of the above steps will make for a much easier life in future years – not to mention sleeping better at night.

Call us today if you need any help with implementing the above steps!

KK’s gut instinct

Major banks are entering their new financial year so there will be pressure to write neww business. This will create competition and improved pricing for new commercial and property loans. Call me with your thoughts on this or post a comment below!

Sporting tip of the month

My vision in October to follow Bart Cummings has come to the fore. His mighty horse “So you think” will be the greatest horse we will see in our lifetime.

About our newsletter

The KK Finance newsletter is a free monthly ezine/e-newsletter for clients, colleagues, friends and family. I’ll be staying in touch with regular tips and news to help you stay ahead when it comes to your finances.

If you think of anyone who would enjoy receiving this newsletter, please share it with them.