Over the last three decades, there has been a spike in the uptake of car loans and the use of credit cards in Australia. A recent study indicates a doubling of income to debt ratio from 104% in 1995 to 212% in 2015. As a result, most people have become debt burdened.
The average Australian household owes about a quarter of a million dollars with the mortgage taking up the lion share. Despite their best efforts, many people don’t succeed in paying down their debt. Luckily, you can escape this debt trap with the help of affordable storage services in Adelaide.
1. Lower your cost of living.
Running a trim household budget makes a high starting point when trying to eliminate debt. Unfortunately, you might have to cut out more than groceries from your budget to make it work. When push comes to shove, you might have to downsize to a smaller home.
Moving to a smaller space lets, you save on rent, and you can use the money to pay down some of your debts. At $375 a week, the average rent of a regular house comes in at an impressive $1500 a month. Downsizing to a smaller home, preferably in the suburbs or the rural areas can help bring down this amount.
Downsizing doesn’t mean that you have to part with most of your possessions. You can just stow them in a storage facility for safe keeping. With careful shopping, you can get a space that costs you about $100 or less a month.
2. Consolidate your debt.
You’ve probably heard the adage if you fail to plan you plan to fail. Having a solid plan is the best way to go about the debt eradication process. It helps to know how much you owe as well as the interest rate on the debt. You then need to come up with a strategic plan to wipe off the debt.
Ideally, there are two debt elimination method — snowball and avalanche — with the latter being pegged as the most efficient. Debt avalanche entails paying off the most expensive debts first as to be rid of the high interest rates. The snowball involves eliminating the smallest debts first to free up their payment.
You then use the freed money to pay off the next smallest debt you owe. However, instead of getting hung up on the technicalities, just crunch the numbers and work with the results.
You want to go with the method that lets you save more money while eliminating the debt quickly. Alternatively, you can opt to apply both of them in your debt elimination plan.
Downsizing to a smaller living space can offer you a way out from a crippling pile of debt. If you have a lot of possessions, you can stash them in a storage unit instead of giving them away or selling them.
Moving to a smaller house lets you save on rent money, which you can then use toward paying off your debt. You can use debt avalanche or snowball methods to attack the debt and help you work towards being debt free.