How do I reduce my short term debt?
2 million Australians have credit card and personal loan debt — here are a couple strategies to demolish short term debt
- Cut out unnecessary spending and avoid any new borrowing
- Make a list of all credit cards and borrowing that you have as well as the current fees and interest rates
- Consider consolidating borrowing to pay a lower interest rate (if you have high interest rate borrowing). This can be doing using a personal loan or a low rate credit card
- Pay off the highest interest rate debt first (this is theoretically the best, though paying off the smaller balances can provide motivation as it provides small wins)
- Close borrowing accounts/credit cards as you pay them off. You can keep one credit card for emergencies
Great article by Moneysmart – https://www.moneysmart.gov.au/media/283411/cant-pay-your-debts.pdf – Provides details on financial counselling and other types of advisory options