This is a guest post by Debt Busters.
A Problem Getting Steadily Worse
Australia has some of the highest debt in the world among its citizens; as a matter of fact, the country is fourth behind Denmark when debt-to-income ratios are compared. Australians have a debt-to-income ratio of between 180% and 200%.
Taking a cue from the Americans, the country’s total debt is over $6.4 trillion. There is a saying in the United States that visiting Australia is like taking a time-machine ten to twenty years into America’s past. Whether or not this is true, the idea is certainly reflected in the level of debt Australia currently has—it’s comparable to US debt in early 2000, when it was at about $5.6 trillion.
The reason this is being brought up here is that, within 17 years, the US debt has ballooned to about $19+ trillion. It has tripled in the last 17 years. Thankfully it has dropped several trillion since the new administration has begun to take over, but that still doesn’t hide the fact that the debt in America has spiralled.
Implications
Australia will follow suit in the next ten to twenty years if action isn’t taken to correct its course. But don’t look to the government for course correction. It is up to individuals to take control of their own finances and set their path to reduce their own debt levels.
The best way to help defray the debt of Australia is to work on improving your own spending habits. One thing you need to keep in mind as you go about escaping debt is that keeping up with “the Joneses”, as the saying goes, is not strictly necessary.
This is a pressure you should eliminate from your daily life if you want to secure your finances. Don’t worry about keeping up, worry about financial independence. Did you finance a house? Did you finance a car? Do you have financed electronics or furniture? Do you pay for a time-share? Are you financing a smartphone?
Getting Rid Of Unnecessary Expenses
You need to undo those things. Anything you’ve financed, consider selling it and live threadbare until you’ve gotten rid or at least reduced of existing personal debt. Do you have a huge credit card bill? Pay that off! Student loans? Consider whether you should pay this off.
Get a late model or used vehicle for a lump sum and use that to get around. Next, cut out creature comforts like fast food, expensive coffee, excessive booze, junk food, movies, music—the things you could prepare yourself for a fraction of the cost, or find free online.
Comprehensive Strategy
Anything not strictly necessary, cut out. You can save thousands this way and pay off debts more quickly. If you’ve got debt over your head, why are you making it take longer to pay off through creature comforts?
Consider your current debts and start ranking them in order of importance to eliminate. This can be quickly determined by the current interest rates and any other expenses associated.
Start tracking your expenses on a regular basis, even if it is just for a month. With countless mobile apps available, you can easily track your expenses on a regular basis and start to categorise your expenditure. This will give you a greater level of insight into your current cash flow and allow you to plan accordingly.
Finally, source professional assistance. One way to help overcome the debt you owe is to use services like Debt Busters; according to their website, “If you’re wondering how to get out of debt and want to improve your financial situation…we’ll have you back on track with your finances in no time.”
The bottom line here is that you’ve got to take a proactive approach to refurbishing your finances, or you’ll just keep seeking into the miry quicksand of debt.
Debt Busters is an Australian owned debt relief agency dedicated to helping people regain their financial freedom. Beside working with their clients on taking control of their finances since 2005, they also share valuable insights on their blog.
