Getting into debt or struggling to live on your income is often more common than keeping money in the bank. Understanding your bad money habits and how to fix them will help get your finances back on track.
Living beyond your means – This is easily done and is not the domain of those with a lavish lifestyle. Having a budget and sticking to it may be easier said than done but good discipline in this area may help stop the overspending. For a simple budget planner, visit www.moneysmart.gov.au.
Know what you owe – You may have a rough idea of what you owe in terms of credit cards, loans, mortgage, etc but seeing the total figure in black and white will help focus the need to reduce your debt. Get together your bank statements for the last six month and chart your outgoings to debt on a simple spreadsheet. If you feel overwhelmed by the figure on the bottom line or feel you need some guidance, consult a financial counsellor. To find a free financial counsellor in your area, visit www.moneysmart.gov.au.
Credit card spending – Credit cards have their place in most people’s financial planning and well managed, this shouldn’t be a problem. Spending on credit cards should be kept to a minimum and if possible, the balance paid off each month.
Balance transfer pitfalls – One of the biggest pitfalls of transferring a balance from one credit card to another is not understanding the rules of any special offers. Providers commonly offer a special rate on the amount transferred but if you spend on this card, you will be charged the full rate of interest. This amount will not be reduced until the initial amount is cleared and the amount you have spent on the card will accrue interest at the higher rate.
Check your credit file – You may think that you have a clear credit file but there may be something lurking that can adversely affect your rating. A simple input error, information lodged against you rather than someone with a similar name or credit fraudulently obtained under your name will be noted on your file and needs action to be rectified.
To find out more about checking your credit file, visit protectfinancialid.org.au.
Plan for the future – Financial planning is a necessary evil. No matter how much or how little money you have, knowing how to make the most of it is vital to ensure even a modest lifestyle. To find an independent financial planner in your area, visit the Financial Planning Association.
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