- Which debts should you pay first?
- How much more should you pay?
- What if you are having trouble finding any extra cash?
Which debts should you pay first?
- declines in value (e.g. phones), and/or
- takes cash to sustain (e.g. cars).
- credit cards,
- car loans,
- personal loans, and
- payday loans.
‘What about my mortgage?’
‘What about my ‘good’ debts?’
How much more should you pay?
How big should your buffer fund be?
What if you’re having trouble finding anything extra?
“If I had extra, I’d pay it already!”
Examples: Finding extra cash
- Spend less.
- Earn more.
- Write a list of ways I could increase my income and do what make sense, for example:
- working extra shifts,
- asking boss for a pay rise (if warranted), or
- looking for an additional or alternative, higher-paid job.
- Cancel subscriptions that:
- are not essential,
- do not carry a penalty for cancelling, and
- will mean I have more cash flow (e.g. cable TV, Foxtel, Netflix, magazines).
- Negotiate cheaper alternatives to essential subscriptions wherever possible. I would ensure I keep as much functionality and coverage as I need (e.g. power, gas, insurance, phone, internet).
- Cancel leisure activities that I can get refunds for. E.g. upcoming holidays, movie/theatre/concert tickets. I would also look at selling the tickets at or above cost price if demand is enough.
- Cancel upcoming plans to spend money that is not essential (e.g. going out to dinner).
- Shop for perishable items in smaller amounts, more regularly if needed. This escapes the false sense of economy we get when buying in bulk then throwing them out when they spoil.
- Work out the cheapest way to travel, and do it. E.g. determine whether petrol and parking cost is more/less than public transport or riding a bicycle.
- Stop buying clothes. Make what I have last, and if I need more, borrow from friends/family or get them from the op shop.
- borrow books and/or DVDs from the library,
- visit a toy library to get ‘new’ toys for the kids,
- make a special dinner at home in lieu of going out,
- have picnics in the park instead of going to concerts,
- search for discount vouchers and coupons to do something special occasionally at as low a price as I can.
What about the kids?
I’ve done all this. Now what?
Want more detail on debt?
- how debt works,
- why types of debt exist,
- why you might want debt, and why lenders want you to have it,
- how to get out of debt fast, and
- how to stay out of debt.
We teach adults how to get on top of their finances so they can stop work sooner and stop losing sleep over money. Part of that is, of course, teaching them how to get into the situations you’ve just read about in the first place. If that sounds good to you, check out our course on Achieving Financial Independence.
You may also like to check out our Facebook page, where we share articles and video tips. Given you’re reading about bankruptcy, you may be interested in reading our tips on credit cards, avoiding the Struggle Street trap, and some wonderful free and cheap financial education resources you can access, including people to talk to for advice.
For those in debt and not quite at the stage of bankruptcy, we also have a free course called ‘Get out of debt fast’. You’ll find it on our homepage.