How can I take control of my debt?

Answer

Getting on top of your debt can sometimes be a daunting prospect, particularly if you feel it’s getting a little out of control. The tips below could help you to turn things around.

1. Work out what debts you have and what they total

Making a list of how much you owe and to whom (including fees and interest) will help you to figure out the total amount owing, and just how much you need to pay back.

2. Do a comparison of what you owe, earn and spend

Figure out what money is coming in and going out, and draw up a basic budget. This can help you to figure out whether you have any room for movement, and if you can extract a little bit of extra money here and there to add to your repayments.

The AMP budget planner calculator can help you crunch the numbers by letting you divvy up your regular costs—like utilities, food and debt repayments, as well as variable expenses such as clothing and eating out.

3. Put a stop to unnecessary spending

Once you have a better idea around where your money is going, it’ll be easier to make decisions around where you may be able to stop spending. Some ideas may include:

  • Reducing non-essential spending on electronics, clothes and shoes
  • Minimising how often you use your credit card and shopping online
  • Making your coffee and packing your lunch at home.

4. Actively manage your money

Stick to your budget and make putting money aside for your essential items, like debt repayments and monthly bills, an ongoing habit, so what’s left over you’re free to spend or save for something big.

Setting up alerts or paying by direct debit can help to ensure your bills are paid on time so you can avoid paying late fees and interest charges, which is important for your credit score and future borrowing potential.

Also, try to pay the full amount rather than the minimum owing when your bills come in, as you’ll often reduce what you pay in interest. Plus, if you can, making extra repayments may mean you can pay off what you owe sooner, but always check the conditions.

5. Shop around for cheaper providers

Higher interest rates and added fees can really impact what you pay back on top of the principle amount. So, if you’ve got an old loan or credit card debt that you just can’t seem to get rid of, see if another provider can offer you a better deal.

6. Consider rolling your debts into one

Consolidating your debts into one loan could make managing your repayments simpler. And, you’ll potentially save money if you can find a loan with a lower interest rate—not to mention you’ll generally only be paying one set of fees. The important thing is to make sure you do your homework as sometimes loans can have exit or break fees and these need to be taken into account.

7. Find larger cuts

Are there ways you could make bigger savings?

  • Could you downsize your car?
  • Are there services you’re paying for that you’re not using or could do yourself?

8. Look at ways you could grow your income

Make money on the side. For example, maybe you could look into freelance work, selling unwanted items online or getting another job.

9. Track your progress

Update your budget on a regular basis so you can see how your debt is shrinking.

What else

Following these steps should help you get on top of your debt, but if you’re still struggling to pay your bills on time, here are some other ideas and tools that could help you on your way:

  • Check out the Money Manager function inside of My AMP. This enables you to see your bank, credit card, loans, super and investment accounts from different financial institutions in one place. It can also help you track your spending and access useful budgeting tools.
  • If you’re looking for a little extra assistance, the AMP Bett3r Account may make managing your money easier, as you can divide your money into pay, save and spend subaccounts.
  • Look into bill smoothing services. This is where many energy companies break down your bills into regular even payments over the year so there are no nasty surprises.
  • If you’re receiving Centrelink payments, check out Centrepay which is a free service that automatically deducts money from your payments to go toward your bills.

Also note, you may be able to seek assistance from your lenders by claiming financial hardship.

If you need further assistance, you might want to speak to your financial adviser. And, if you don’t have one, you can call us on 131 267 or use our find an adviser tool.

Important information

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Any advice in this page is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of this advice having regard to those matters. AMP Bett3r Account is issued by AMP Bank Limited ABN 15 081 596 009, AFSL 234517. Consider the terms and conditions available on request by calling 13 30 30 or at amp.com.au/bett3r and whether this product is appropriate for you. Fees and charges apply.

Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any decision. Except where liability cannot be excluded, AMP does not accept any liability for any resulting loss or damage.