YOUR WEEKLY MONEY DILEMMA

I have so much debt & everyone is wanting more repayments than I can afford

Oh, this sounds very stressful!

Getting into debt cycles can be so draining and frustrating. You can totally feel like you are spinning your tyres and getting nowhere. Minimum repayments generally keep us in debt for a really long time.

Canstar did some research on this a little while back and for someone making minimum repayments on $15,000 of credit card debt, on a 16.97% interest rate, it would take them 18.5 years to fully pay off! And the total amount they would have paid back is $27,605 – that is almost double what you had borrowed 🤯

MoneySmart also has some good tips and calculators for credit card debt.

The first thing to make sure of is that you aren’t adding to the debt. Make sure there are no new amounts being added (including direct debits). You need to work on closing the gap, not making it bigger.

Also, check your interest amount and see what rate you are on. If this is from a mortgage, you may want to talk to your Broker to ensure you are getting the best rate. If it’s a really tough time, tough decisions need to be made.

Should you sell the asset? Are being fairly remunerated in your job? Are there ways you can bring in extra income to help (get creative and leave your ego at the door. If you need the cash desperately, no job should be discounted – maybe your dog sit, child mind, do ironing or mow the lawns for people, or start a side hustle)… if it's only for a short period it might be worth it.

Financial Hardship

If you find yourself in a really tight spot, contact your banking provider and ask to speak to the Financial Hardship team.

They may be able to work with you to give you a few months interest-free to get you back on your feet (the longest I was ever able to negotiate on behalf of a client was 18 months, but it took a lot of conversations with them!) or maybe reducing your repayment amount down for a period of time.

Know though that this will extend the debt timeframe and likely have you pay more in interest over the long term. Getting a financial hardship arrangement also generally doesn’t impact your credit score (check with your bank!).

If you need expert help, you may want to contact the National Debt Helpline who can often give you free advice on your options.

Once you get out of debt (which I hope you can do soon), it's important to make sure you don’t fall back into any old habits that helped you accumulate debt in the first place (unless it's a good debt against an appreciating asset). Be honest and clear with yourself about any behaviours and rituals that need to stop that caused you problems in the past.

Good luck!

Have a money dilemma?

Money dilemmas can be a nightmare! They can leave you up all night ruminating about what to do, have you feeling alone and isolated or just plain ol' stuck. So, we are here to help. I am going to tackle one a week and give you my unbiased, no BS general thoughts on how to tackle your conundrum. We would love for you to send yours (or someone you know) in. 

Obvs all of this is general advice only... especially important to note any and all of the comments above do not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.