Seven ways to reduce your debt in 2021

Have you started the new year with a negative bank balance or maxed-out credit card? Here are seven ways to lower your debt and get ahead in 2021.

 

1. Calculate how much you owe

As confronting as it sounds, it’s important to get a handle on your financial position to be able to tackle it. Once you know how much you owe, be realistic about how much time you’ll need to pay it off.

Check your bank app, log in online or give your bank a call to find out how much you owe.

 

2. Reduce your interest

Paying off the credit cards or accounts that are charging you the highest interest rates will help the debt disappear faster, because it’ll reduce the amount of interest you get charged each month.

 

3. Have a thrifty month

Take a close look at your budget, decide where you’re able to cut costs and use the money saved to pay down your debts.

This could be a matter of taking your lunch to work rather than buying it every day, leaving a bit earlier to avoid taking toll roads or buying second-hand where possible.

If you don’t have an existing budget or aren’t sure where to start, check out our budget tips for the new year.

4. Return or sell gifts you know you can’t or won’t use

If you know you’re never going to use something, it’ll be much more useful to you as spare cash than household clutter.

There are now so many platforms to resell unwanted gifts, such as Facebook MarketplaceGumtree, eBay, making it easier than ever to turn unwanted items into handy boosts to your debt repayments. You can even change the privacy settings on Facebook Marketplace ads so the person who gave you the gift won’t see that you’re selling it!

5. Plan ways to make some extra money

Think about taking on some extra shifts or even a side job will help boost your cashflow to pay off your debt faster. If you’re into craft, you may even be able to sell some of your creations online. Mention to your contacts that you’re looking for some extra work, and you never know what they might come back with.

 

6. Plan ahead

Consider setting aside a small amount from each pay cheque that can build up into a Christmas fund in a separate bank account. Just $10 per week is over $500 per year that can go towards holiday spending, so you can avoid getting into debt again come December. As a bonus, watching the fund grow over the year is satisfying and will boost your peace of mind.

 

7. Get free help to manage your finances

Wesley Mission offers free, independent and completely confidential financial counselling that’s available no matter your location or situation.

 

To find out more or book an appointment, contact:

Wesley Financial Counselling

Phone: 1300 827 638

Email: financialcounselling@wesleymission.org.au

Website: dev-www.wesleymission.org.au/financial-counselling

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