Its Crunch Time Get Your Finances Back On Track
Its hard to believe its that time of year again. Yet here we are; 2011. It would be nice to begin the year in a secure financial position but for many Australians post-Christmas is a scary time. Its the time of realisation; when Christmas spending catches up with you.
Credit card bills start to mount. Expenses start to roll in, like back-to-school needs.
Lots of consumers have taken advantage of retailers interest-free loans. These obviously seem attractive; take the goods home today and pay later. If you can pay within the interest-free period of the contract then theres no problem. But if you cant, the repayments escalate dramatically.
Australian household debt figures are high, and rising home loan interest rates have added to the financial burden.
The cycle of debt can be difficult to escape. Cant pay off a credit card? Just get another one to pay it off, right? This is a worrying pattern.
Getting your finances back on track should be high on your new years resolution list. But where to begin?
A good starting point is to work out where you stand financially. How much do you owe? What can you realistically afford to pay back?
If you cant make a repayment by the due date, dont be afraid to seek an extension. Creditors may be happy to negotiate. Many financial institutions have a hardship team who deal with these requests.
From a practical point-of-view, its a good idea to make a weekly budget and record everything you spend. Avoid spending on credit, particularly making cash advances which attract high interest rates. Pay back as much as you can, not just the minimum credit repayment.
Seeing a registered financial planner can be a good move, to help you establish a long-term plan. For example, consolidating all of your debt under one single personal loan or mortgage can mean a lower interest rate than your credit card rate.
There are also legal solutions you can explore, such as a debt agreement, or bankruptcy as a final resort. Bankruptcy basically means a Trustee is appointed to take charge of your assets, with the aim of liquidating (selling) them to pay your debts. These decisions should never be taken lightly, or without first seeking specialist advice.
You should also be aware that if there is a dispute about what you owe, the Consumer Trader and Tenancy Tribunal has wide powers to make orders in a fairly informal setting, and if there is enough at stake, you can apply to the Court to set aside or vary an unjust contract under the Contracts Review Act.
Good financial management now is imperative. ASICs consumer website (www.fido.gov.au) has some great tips.