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Reduce your debt – 5 handy tips & tricks

July 13th, 2011 -

While we all know the value of saving, sometimes, with the monthly bills coming in, school uniforms, fees and such things to pay for, it may seem an impossible task. The aim is to try and work through it step by step so that you can get ahead of your day to day bills and prepare for any unexpected or one-off expenses.

1. Budget

First things first, you need to have a good understanding of what your household spends vs what you earn. To get a good overview, you will need to collect all your bank and credit card statements for the past year as well as your cash receipts for the past month. Excellent budgeting tools can be found at www.sorted.org.nz to help you organise your household spending.

2. Pay off your debt

The next step is to look at your debt and prioritise repayment. By having a good look at what you owe you will fully understand exactly what your debt is costing you. It may be worthwhile to consider refinancing your loans, hire purchases, credit cards and other debt into one simple loan. Here’s where we can help – just make a time to meet with a friendly lending consultant from your NZCU branch to see if this is the best option for you.

3. Reduce and accumulate

Generally it is wise to reduce your debt before you start saving but some argue that it is better to start a good savings habit as soon as possible. Remember that saving a little each week soon adds up. At NZCU we have a variety of accounts to help you achieve your savings goals – ask us which one may be right for you!

4. Minimise future debt

Once you have your debts under control the secret is to keep up the good work! Credit cards, store cards and hire purchases are all very tempting and seem easy at the time but you will end up paying out of your pocket. Ideally, any new purchases should be saved for – paying cash for big ticket items often means you are able to negotiate a cheaper price!

5. Watch your savings grow

Once you have a good savings habit you can watch your nest egg grow. If you receive a pay increase – save more (you did without the money before!). It is much more fun to manage your savings through higher interest rate accounts like on-call savings accounts and term investments than trying to work out how to pay off that debt.

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