https://www.qmswebsitebuilder.com/ News en-US hourly 1 http://wordpress.org/?v=3.5.1 Normalising Debt vs. Living debt Free https://www.qmswebsitebuilder.com/blog/article/normalising-debt-vs-living-debt-free.html 13 July 2017, 11:14 am With Australian Household debt rates rising higher than ever, it’s easy to normalise your debt as everyone begins to think of debt as normal. But normalising debt can lead you to fall into deeper debt...

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With Australian Household debt rates rising higher than ever, it’s easy to normalise your debt as everyone begins to think of debt as normal. But normalising debt can lead you to fall into deeper debt, causing a debt-cycle. So instead of taking out another loan to finance your next purchase, follow these tips to stop normalising debt and start living debt free.

Debt free man smiling and looking at money bag.

1. Create A Budget

People that normalise debt tend to live beyond their means and continue to use debt to fund their lifestyles. However, this may cause them to fall into a slippery slope as they fall deeper and deeper into debt. Thus, creating a budget is the first step in the positive direction if you want to live a debt free life. When you set a budget remember to be realistic and have an ultimate savings goal in mind that will go towards paying off your debt. Once you’ve worked out your savings goal you will be able to work out exactly how long that you have to stay on a budget to successfully pay off your loan.

2. Realise That A Credit Card Is Not A Source Of Income

Many individuals fall into the habit of normalising debt by thinking of their credit card as another source of income. But just because you have a high credit card limit, does not mean that you have that ‘extra’ money to spend on whatever you want. A credit card should not be seen as a source of income to use on luxury products and services but rather a card to use for emergency needs. If you find it difficult to change your mind set on how credit cards should be used, we recommend cancelling them to avoid falling into further unnecessary debt. Remember, to always pay off your credit card balance each month to avoid racking up extra charges and late fees.

3. Stop Justifying Your Wants

It’s easy to confuse those new pair of shoes that you really want as something you need. But an important step towards living a debt free life is to stop justifying wants as needs. Needs fall into these four basic categories – shelter, food, water, transport and a certain amount of clothing. However, lots of individuals tend to spend a large amount of their income on more luxurious forms of food and clothing; justifying their spending as a ‘need’ rather than a want. An easy way to avoid unnecessary spending on food is to come up with a meal plan and packing lunches to work.

4. Understand Your Debt

The final step to living debt free is to face and tackle your current debt straight on. To do this:

  • Evaluate the nature of your debts and ask yourself what current habits are making you fall into debt.
  • Calculate your total debt. When you owe multiple debts such as a home loan, car loan and credit card debt; it can be hard to calculate and pay off all your debts at once. Debt Fix offer debt consolidation services to bring all your debts together into one affordable payment.
  • Start an Emergency Fund. It’s easy to rely on loans in emergency situations, but it can take you a huge step backwards as it forces you into larger debt.

If you are struggling to pay off your debts we recommend you speak to a debt professional today. Debt Fix help thousands of Australian households regain financial control of their lives by providing tailored plans to overcome debt. If you need any help managing your debts, please don't hesitate to contact our specialists on 1300 332 834.

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4 Questions to Ask Yourself before Buying a Home https://www.qmswebsitebuilder.com/blog/article/4-questions-to-ask-yourself-before-buying-a-home.html 27 June 2017, 12:09 pm Buying a home is a big step for a lot of individuals, couples and families. However, rising household debt in Australia indicates that many home buyers are jumping into home ownership before they can ...

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Buying a home is a big step for a lot of individuals, couples and families. However, rising household debt in Australia indicates that many home buyers are jumping into home ownership before they can really afford it.

Here are 4 things that you should consider before purchasing a house:

It is important to know how much savings you have to gradually pay off a home loan.

Why do a need to buy a home?

Buying a house for the wrong reasons can be disastrous. Thus, the first question to ask yourself before buying a home is WHY. Identify the need for you to buy a home in the first place and then ask yourself why you want to buy this particular one. If you need a stable place to live, a bigger place to accommodate your growing family or want to move into a better neighbourhood – then you have a good foundation reason to buy a house. However, if your answer is no - look into other options available instead of buying a home. E.g. Moving in with your partner, living at your parent’s house, home-sharing or renting.

Can I afford to buy a Home?

When addressing this question first home buyers often make the mistake of only looking at their immediate circumstances, but it’s very important to look at possible future circumstances too. Some things to consider include:

  • Do you have enough down payment to satisfy your initial home loan?
  • Is your job/career stable enough to commit to years and years of mortgage repayments?
  • If you’re buying a house with a partner – are they someone you can depend on?
  • In the case of an unfortunate circumstance such as a job loss or a divorce, will you still have enough saved up to commit to your mortgage repayments?

What are the hidden expenses? Before buying a house, you should consider any hidden expenses.

When purchasing a new home, many home buyers fall into tunnel vision and only look at the price of the house. However, it’s very important to think of hidden expenses when buying a home. Some hidden costs can include:

  • Home Insurance – Home insurance is essential to cover your safety you and your property the case of any unforeseen circumstances. As the cost will vary from homeowner to homeowner it’s important to get a few different quotes before purchasing your home.
  • Stamp Duty – The cost of stamp duty to transfer the property into your name can be hefty and should be factored into your initial house cost.
  • Amenities – The electricity, gas and water bills may vary in your new home compared to where you currently live, so it’s important to factor this into your monthly budget.
  • Renovation – Will you need to renovate any rooms or features in your new home?

How long will you need to pay off this new House?

With household debt steadily rising in Australia, it’s important to carefully consider how long it will take you to pay off a potential home loan. To properly answer this question you will need to understand both your current and future income and spending habits. It’s a great idea to set a period e.g. 20 years by which you would like to pay off your debt by and work towards achieving it.

Before applying for any home loan we recommended you speak to a debt professional to understand your ability and options of paying off a loan. Call Debt Fix on 1300 332 834 or leave an enquiry for more information.

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