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IT'S A MIRACLE! COMING BACK FROM DEBT AIN'T AS HARD AS U THINK...

Anyone struggling with a horror mortgage or other personal debt problems may feel like the only thing that can save them from financial oblivion is a miracle.

However, there are no miracles in money management. It’s all about numbers, and understanding how the numbers work is the first step in resurrecting your finances.

1.      FESS UP – Too many people ignore debt problems, hoping things will get better, but they never do. Just like compound interest helps people build wealth over time, compounding debt destroys wealth – only much faster because of high interest rates. Mortgage disasters often stem from problems with other debts such as credit cards. For example, a $10,000 credit card debt at a 20 per cent annual interest rate will more than double in four years because of compounding.
2.      SPEAK UP – Fear may keep us away from the big bad banks, but they’re not so bad if you communicate with them early. Banks and other lenders may be able to help you in several ways, including offering a payment holiday or an interest-only loan to reduce immediate pressure.
3.      SUM IT UP – Almost anyone who monitors where their money goes will find examples where simple cuts can be made. If you don’t know what you are spending, there’s no way you can fix a debt problem.
4.      DIRECT DEBIT IT DARLINGS – Set up regular direct debits, ideally of more than the minimum repayment to pay down the debt faster and reduce interest costs. Most people just spend what’s left over from their salary, so if it’s not there you may not miss it.
5.      HIT HIGH – It’s pointless paying extra off the mortgage if you’re also paying credit card or personal loan interest at 15 per cent or more. The mortgage debt is the cheapest one, so get rid of all the other loans first.
6.      GET HELP! Financial counsellors offer free, independent advice and can be found at financialcounsellingaustralia.org.au. There are also a businesses that offer budgeting and loan assistance. These services can cost money but may prove worth it for some. Plenty of people have recovered from a near-death experience with debt, and usually they emerge stronger and wiser from the experience.

GOOD LUCK MIRACLE MAKERS!

The Goss!
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IT'S A MIRACLE! COMING BACK FROM DEBT AIN'T AS HARD AS U THINK...