If you are one of the millions of Australian who are looking for ways on how to reduce debts, these three strategies might be helpful. Getting out of debt is not an easy task. It may take time and lots of adjustment but it is doable. Here the three strategies you may employ to help your quest in reducing your debt.
- Organize your debt.
Organizing your debt is the first step. Remember that your debts do have the same effect in your finances. List down all your debts, it would be best if you can sort it from the biggest to the smallest amount you owe. Write down the name of creditors, the amount you owe, its monthly payment and the interest rate. This way you can clearly see which of your debt is have highest interest rate and monthly payment.
- Prioritize your debt.
Prioritizing your debt is the fast way to reduce your debts. By prioritizing your debts, you should pay the minimum in all your debt except for the one that has the highest rate. Pay as much as you can afford the debt with highest interest rate, while paying minimum on others. Cut your budgets on things are that not really needed (luxuries and wants) and put that money on the debt with highest interest rate. You might be surprised to see how quickly your debt begins to drop.
- Consolidate your debt.
If you owe money from different creditors, you may want to consider combining all your debts into one single loan or debt consolidation. Debt consolidation will allow you to pay your debts in one monthly payment instead of having to pay multiple payments for different debts. Depending on your payment strategy, you may end up paying your debt longer but with reduced monthly payment or you can fast-track by paying higher monthly payments.
There are many strategies and ways to reduce debt, but above all these is your willingness to sacrifice few or several of your luxuries and change your lifestyle.