Simple Strategies to Prioritise your Debt Repayments

by Fox Symes on March 6, 2014

Are you currently surrounded by a swarm of leaflets, receipts and monthly accounts, reflecting the itches and pressures of the New Year and Christmas season? You’re not alone. Right now, you may feel like you’ve been bitten by an impossible task and the totals are beyond anything you can take a chunk out of without mortgaging your house, selling bodily organs or throwing in the towel completely. Before you go to those extremes, take a breath; working through a list of priorities will help you regain control, improve your financial outlook and reassess spending habits, identifying possible fiscal funnels.

Review Each Debt Honestly

Ask yourself a series of confronting, essential questions. Is it your debt or are you sharing the load? How much do you owe? What is the interest rate – Is it stable or variable, how has it changed? How long do you have to pay off the debt? Are there any fees setting you back? Can you claim part of the loan on tax? These numerically based questions will introduce a shred of objectivity and logic; after documenting the above information for each debt, order them from highest to lowest according to interest rates and extra costs. Every meagre you make now is running through these like a sieve; a grain of sediment may collect here and there, but the majority of your payment disappears and the debt is left wanting more.

Identify Opportunities for Consolidation

For the uninitiated, consolidation can be scary. On the surface, it seems like another collectors trap to confuse and artfully extract funds from your bank accounts, trumping up existing debt (yes, you do owe that lump sum, even without consolidating). In truth, consolidation can be a god send, providing an opportunity to combine high interest debts into one place, for a neater rate, reducing penalties and extras on the side. Saving on interest will enable you to increase your payment rate, lifting you above the minimum baseline and ending a vicious, never ending cycle.

Sort Out Your Necessities

Although credit cards and personal loans feature heavily in financial conversations, don’t forget about those things in life you consider absolutely essential – Electricity, water, internet, phone, car payments, educational costs, clothes, food and rent. Be honest with yourself, what can you afford? If you have the option, decrease your monthly payments on both internet and phone; research electricity companies and figure out whether your current supplier is best suited to your needs; keep up-to-date with car payments and use public transport or ride to work when possible, to save on petrol. Are you a gym junkie? Make sure you’re not haemorrhaging unnecessary cash by attending a fancy, barely used establishment; step down to one of the many 24/7 alternatives or exercise outside.

Find New Ways to Reward Yourself

When we feel we’ve done well, we tend to spend more, convincing ourselves (and quite correctly) we deserve a small piece of recognition or respite. Instead of booking an expensive restaurant or splurging on a new article of clothing, technology or the latest Gold Class movie, find something you enjoy doing outdoors. The environment is cost effective and beautiful, calming even the most tightly wound among us with its magnificence. Hike with friends and take in the view; pack a picnic and spend the day playing Frisbee in the park; visit your local pool and spend the day in a shaded spot, reading your favourite novel and escaping the heat with periodic swim spells. Pleasure and leisure needn’t cost more than a credit card payment!
Do you have any tips to share? Are you harbouring a trade secret or two you’d like to share? Let us know in the comments below!

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