13 April 2011

Cheapskate's tips for debt reduction

The news on debt in Australia is not good. According to the Australian Debt Study from Veda, 21% of Australians are finding it difficult to repay debt. Two percent of those people don't know if they be able to make their next debt re-payment!

To reduce your debt:
Create a Spending Plan - allocate every cent of income to a spending category (and Emergency Funds and Peace of Mind Accounts are spending categories)

Track your spending - if you don't know where it's going you can't cut back on spending

Cut up your credit cards
- apply for a debit card if you feel the need.

Use Cheapskates Payment Push plan for debt repayment (and stick to it!)

Build your Emergency Fund
- when it is fully funded then you can add that money to your Payment Push but you need a decent Emergency Fund to avoid having to resort to credit during emergencies. Aim for one month's total living expenses, then build to three months, then ideally have six months living expenses in reserve.

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