Written by: Nick Bregozzo

The finances of many Australians are clearly hurting. The household income to debt ratio of Australian families has risen consistently in recent years and… doesn't… show signs of slowing. It is estimated that the average Australian household owes a year and a half’s worth of disposable income in debt. To protect yourself and your family from falling victim to the debt plague, try taking some simple steps to reduce and manage your debt today.

    1. Set up Recurring Payments: Avoid expensive late fees and over-the-limit fees on credit card bills by setting up an automatic payment system. Most banks offer electronic funds transfers or automatic bill pay to customers at no additional cost. Utilize this benefit by forcing yourself to pay creditors on time, every time. Try to pay more than the minimum payment to pay down debt quicker and accumulate less interest during each pay cycle.


    1. Make a Balance Transfer: Shifting money around doesn’t make debt go away, but it may ease the pain. Try moving high interest credit card debts to lower interest cards. For example, if you currently pay more than 20 percent on a credit card with a $5,000 balance, you are paying $1,000 in interest every year. Move that same balance to a credit card with a rate of 10 percent, and you can save $500 each year, and apply the interest you would have paid toward the debt balance.


    1. Make an Arrangement: Speak with your credit card company about your financial situation. If you make regular payments and are in good standing with them, you may be able to negotiate a lower interest rate on your credit card. Be assertive when talking to them, and don’t be afraid to ask the company to do better. If you have received any recent credit card offers that beat their current interest rate, ask them to match it.


    1. Consolidate Your Debt: Debt consolidation may be one of the quickest ways to manage debt. A consolidation loan almost always offers a lower interest rate than credit cards. Additionally, most consumers find it easier to make timely payments when only one payment is due each month rather many. Be sure to shop for a loan with a low application fee and no early payoff penalties.


    1. Tap into Your Equity: Chances are that if you own a home or are paying on a mortgage, you have some equity. You can choose to refinance your mortgage to pay off credit cards. The interest rate on a home loans is much lower than those of personal consolidation loans. However, beware that your home serves as collateral for the loan. If you default, you may lose your home.


    1. Seek Professional Services: If your debts are unmanageable and you feel like you may be facing bankruptcy, seek the help of a professional financial consultant or a debt management company. They may be able to offer alternatives to bankruptcy. Also, credit card companies often respond to the negotiation process of third parties better than they do with the credit card customer. A professional may be able to settle your debt for a fraction of the money you would otherwise pay.

The worst thing you can do is ignore the problem and pretend that it will fix itself. This tactic only delays the inevitable and will most likely amplify the problem. The tactics raised in this article provides tried and tested methods to deal with unmanageable debt.

Living with debt can be stressful and there is no shame in approaching an expert for assistance. If you fall ill, naturally you would seek professional help and so the same logic should be applied when your household budget has taken ill. For a lot of people, taking this first step is extremely hard because of pride and some people may feel that they will be judged or ridiculed in some way. Nothing could be further from the truth and the reality is that reaching out for help is the most courageous thing that you can do.