Building wealth and achieving financial freedom should be a life goal for everybody. We might all want different lifestyles and seek fulfilment and happiness in different ways. But ultimately your financial security is the foundation on which you will seek those goals. Building wealth is for everyone, but before you take your first steps to building wealth, it’s essential to get your bad debt under control. Even if you’re already actively building wealth, you will fall short if you don’t eliminate your bad debts.
Bad debts are money borrowed to purchase non-income producing and/or depreciating things. Examples include credit card debt, personal loans, car loans or holiday loans. Debt can snowball over time, keeping them in control should be your top priority. Here are five quick tips for you to reduce bad debt FAST. Then start embarking on your journey to get rich slowly!
Taking a bit of time to reduce insurance costs will give you surplus income, which then can be used to service your existing debts. All it takes is a bit of time and effort. Compare your auto, home and life insurance to make sure you are getting the most appropriate cover for your situation at the best price. Your starting can simply be a comparison site such as finder.com.au. For more complicated insurance such as life, income protection and TPD, you may need to speak with your super fund or find a financial adviser to have everything organised.
Over the years, you’ve probably stacked up a lot of things you no longer need. So sell them, and sell them creatively. A garage sale may be one way to do it. Otherwise you can try multiple online listings. Try Gumtree. Got a car you want to sell, try Carsales, or if you’re selling your car in the country, try Country Cars. Whatever it is, be creative and recoup some cash towards paying down your debt. If you’re determined enough, this shouldn’t be too hard, after all, one man’s trash is another’s treasure.
Just like you have things that you no longer need. Chances are you have old subscriptions that you no longer want lying around. Subscriptions are recurring and although they may seem cheap, they all add up. Maybe you have that magazine subscription, newspaper subscription, gaming subscription, paid TV subscriptions, or even gym subscription (you can work out at home too). Ask yourself whether you need them, if not, make the effort to cancel them. You’ll be surprised at your improved monthly cashflow!
There’re many life essentials that we buy or a regular basis. We all buy groceries every week, so why don’t we buy things in bulk. Go to Costco and start picking up things in bulk. Whenever you have the chance, notice your buying patterns. What items do you buy regularly that also have a relatively long shelf life. Once you identify those items, it’s time to buy in bulk.
Doing you go to the same coffee shop everyday, buy clothes at the same brands, or go to the same restaurants every month. Good, do they have loyalty and rewards programs? If so, keep track of them and participate in them. Besides from the good feeling of getting freebies regularly, you will also reduce your spending and speed up the time it takes to pay down your debt. Small things matter!
There you have it, some simple tips for you to squeeze more out of your pay cheque and start reducing your bad debt. Remember, the faster you reduce bad debt, the faster you’ll build your wealth.