Banking expert’s five tips to pay off debt and save money

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With summer almost over, it is time to turn your attention to the credit card, which usually takes a hammering over the holiday period and plan how you are going to knock it back into shape.

Rod Attrill, general manager of banking at comparethemarket.com.au, believes now is the perfect time to get proactive about reducing your spending and offers his five best tips to get your finances quickly back in shape.

1. Set up four bank accounts
Set up low-fee accounts for your bills, then savings, a splurge account for holidays and fun, and finally an everyday account. Figure out how much should be allocated to each, then automate regular transfers.

2. Get proactive about reducing expenses
If you are struggling to pay bills at the end of each month, or not meeting your savings goals, you can reduce your spending by cancelling memberships you are not using (such as the gym, local clubs, etc.), finding better deals across your bills or switching loans to lower interest rates.

3. Reduce the limit on your credit cards
For some of us, the danger of having a $10,000 limit on our credit card means that we automatically count that $10,000 as part of our everyday spending money. Take control by reducing the limit on your card to an amount you can pay off confidently every month.

4. Hide your savings
If you are able to easily access your savings, it is difficult to have the will power not to touch it. Work out what you need to do to protect your finances, so you aren’t constantly drawing down on your savings with your card or through internet banking. Think about choosing a savings account that penalises you for withdrawing money – for instance, some accounts do not pay interest within any month that you make a withdrawal.  

5. Make payments towards your high-interest debts first
Prioritise clearing high interest debts quickly – these are usually credit card debts. The interest on some debts can be reduced temporarily if you, for instance, transfer your credit card debt to a 12-month zero-interest card, or fix your mortgage interest rates. These will enable you to prioritise paying down other debts first.

What strategies do you employ to help you pay off your debt?

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

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Written by Ben

23 Comments

Total Comments: 23
  1. 0
    0

    Just like your own personal health, the old tried and true axiom, prevention is better than cure, applies just as appropriately to your finances. “it’s easier to stop something happening in the first place than to repair the damage after it has happened.”
    If you really don’t need it and can’t afford it, don’t buy it. Make your number one priority getting rid of all of your credit cards and replace them with a Debit Card that only allows you to spend what’s in your savings account. ASAP!! It DOES work!!! Life goes on and much more happily!!

    • 0
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      Nay I love my credit cards and love my free flight every year too much to give them up.

    • 0
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      Very true Old Geezer. Credit cards are a great friend to so many and the world would probably stop going around without them, but, this is a conversation about how to get out of the red and I would imagine that someone like yourself probably gets rid of that red every month.
      BUT, for those who don’t and can’t, they truly are a curse and literally ruin so many lives.

    • 0
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      Yes I get rid of that red every month on all my credit cards. They are a great slave but a poor master. One should be grateful as if everyone used them like me they wouldn’t exist today.

    • 0
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      Most well off Australians have learned to juggle their debt around but in reality are fooling themselves and keeping the banks rich.

      I have never used a credit card and never will. I go without rather than live beyond my means.

    • 0
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      I’m certainly not making the banks rich but someone is as I love all those nice dividends I get too.

    • 0
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      The banks make nothing from me either OG. I don’t pay interest on my credit card, am never overdrawn or late with payments, don’t pay fees or charges on my bank accounts or any withdrawals and keep most cash in high interest on-line accounts for high(er) interest and easy access not a ‘normal’ bank account with next to no interest at all.

    • 0
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      I have been using one credit card a lot lately as the bank is giving my 1% cash back on purchases. It doesn’t take much to enough for a free coffee and a ham and cheese toastie at the golden arches.

    • 0
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      Doesn’t a credit card come with an annual fee. The bank is making money out of you, OG and KSS.

    • 0
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      Oh Gawd Triss
      Another nfi !!!

      Where do they find these people

    • 0
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      I don’t pay any annual fees on any of my credit cards.

    • 0
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      No annual fee Triss! The bank is making precisely $0.00 out of me. And that goes for all three financial institutions I deal with.

    • 0
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      I find my Credit Card a useful financial control tool. I use my Credit Card for 90% of my expenditure and download my monthly statement in CSV format straight into my budget sheet. This gives me a snapshot of my expenditure in each of my 18 categories for the month and progressive spend against budget.
      Other bonuses are the interest free period on my credit, No annual fee and No International exchange fees when overseas or purchasing from overseas.
      having said that, Credit Cards are not for everyone, you must be financially literate and disciplined, if not, you will get burned.

  2. 0
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    We were talking the other day about how we grew up without credit cards and how we managed to cope. The answer is very simple, just use cash. When our pockets/purse were empty we stopped spending and didn’t have a debt for something we didn’t need. We saved up for those larger items we needed or got a personal loan from our bank which was only granted if we had security and an ability to repay.

    My advice to managing debt is to draw cash from the bank each payday and budget with the cash only. Enough funds to cover mortgage. utilities and savings, of course, are left in the bank when deciding how much cash to withdraw. Not all things in the past are old fashioned and should be left in the past.

    • 0
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      I never use cash unless its to pay a tradie for a discounted cash job to help him avoid GST and income tax or if there is an unreasonable surcharge

      Oh and when I buy a hot dog at Bunnings

    • 0
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      I never use cash unless its to pay a tradie for a discounted cash job to help him avoid GST and income tax or if there is an unreasonable surcharge

      Oh and when I buy a hot dog at Bunnings

    • 0
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      Just watch those tradies who add GST to their bills but are not registered for GST as they pocket the GST themselves.

  3. 0
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    Work out a budget and stick to it. This is crucial in retirement when living on a fixed income as you need to understand your income and expenditure. There are various methods, choose one that works for you. I use a spreadsheet to track but a book would work just as well. The article mentions credit cards, but things like Afterpay and Payday loans are just as bad, or worse

  4. 0
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    4 bank accounts ????
    Hide your savings ???
    What a load of rot

    SAving and investing is a mind set . Get with it or forever struggle with money

    • 0
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      Lothario I actually do have three bank accounts, one for salary to go into then out of that some goes to a high interest ‘bills’ account elsewhere, and more goes to another high interest savings account also elsewhere (but different organisation). The two ‘other’ accounts are easy to access on-line but have no ATMs so it makes it less likely to be raided for everyday spending. Also the money transfers happen automatically because I set them up that way – I am the only person who gets paid by direct debit from my accounts.

    • 0
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      I have 3 bank accounts IN Oz too but that’s because one is in USD and another in GBP

      Have a dozen overseas including a Swiss one ( declared of course )

  5. 0
    0

    4 bank accounts ????
    Hide your savings ???
    What a load of rot

    SAving and investing is a mind set . Get with it or forever struggle with money


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