The number of Aussies that are completely debt-free is definitely small. Even though it may appear impossible to live a debt-free existence, that is far from being accurate. So, if you want to find out how to decrease your debt, a plan of action and a strong will is all you need.
It’s the Little Things that Matter
Truth be told, because of the modern context in which we live, we are urged and tempted to make rushed decisions regarding shopping, which is where credit cards come in. Still, this current expectation of immediate gratification is the recipe to living a life tormented with debt. Even so, learning how to decrease your debt is attainable.
On that note, prioritising and focusing on paying off your credit cards is the biggest financial favour you are doing for your own good, particularly if your cards are linked to high-interest rates. Nonetheless, the secret is learning to cope with the problem and changing your habits.
Managing to pay off your credit card debt only to start “working” on a new one won’t get you anywhere. On that note, many people prefer switching to a “cash-only policy” to remain debt-free. Unfortunately, it’s the silly mistakes that get us and keep us in debt, such as inconsistent financial planning and lack of determination. If you’re wondering how to decrease your debt ASAP, this is the way to do it.
Diminish Your Fixed Expenses
No one argues that each person has a category of fixed expenses one cannot overlook; however, no one says that there’s nothing you can do to lower these. Household bills such as phone, the Internet, and electricity can make a huge difference when paid on time.
Also, you can always consider renegotiating your contracts and ask for better deals. What we’re trying to outline is that those small, insignificant savings can mean a lot when they’re implemented into your debt reduction strategy.
Consider Debt Consolidation
Debt consolidation is often the answer to the question how to decrease your debt. In the case in which you’re struggling to cope with all your debts, rolling all your loans into a single one can be a decent choice.
That can drastically reduce your overall repayment requirements. Still, if you intend on keeping your current payment obligations on the new loan, that means fast-tracking the repayments, instead of filtering each debt. From a psychological mindset, focusing on a singular loan can be deliberating as opposed to struggling with many loans.
Debt consolidation is, in fact, a new loan you choose to take to repay your existing debt. In addition, taking this decision can aid you to convey your financial future from a clearer perspective.
It’s best to discuss your financial situation in detail with a specialist before going for it.
How to Decrease Your Debt and Simultaneously Invest?
Reducing your debt as you invest doesn’t have to be an oxymoron. Begin by prioritising the debts with the highest interest rates. Afterward, you can direct a segment of your earning towards investment, and you’ll reap the results. For instance, it’s quite popular in Australia to buy a second house as an investment property, to build passive income. Even so, it’s best to acknowledge that each has a distinct financial context that should be considered.