The financial outlook is not looking good, with rampaging cost-of-living expenses showing no signs of slowing and a recession predicted.
Housing, utilities, fuel and food seem to be on a non-stop upwards trajectory. A few more financial blows may tip a few of us over the edge and into too much debt.
Debt can be useful – it’s how most of us pay off our houses – but it can also be a crippling financial position, and often it’s hard to know where to turn when there seems to be dead ends around every corner.
Thankfully there are plenty of resources, many of them free, to get you back on track.
The most important step is the first one – realising you need to ask for help and then starting to fix the situation as soon as possible.
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Money problems can be humiliating and demoralising, but they’re often cited as the cause of mental health problems and marriage breakdowns so get working on things.
But who to talk to first? Well, that’s easy. Talk to your creditors, explain the situation. Many financial institutions have hardship programs and if not, you may be able to negotiate more time to pay, flexible payments or smaller repayments.
You may be in denial about how much you owe, so bite the bullet, sit down and get all your paperwork in order. Any financial institution such as a bank will want to know the big picture before they agree to any payment plan.
A great free resource to start off with is the National Debt Helpline on 1800 007 007 or visit the website.
As a government agency, there are no fees and the advice is independent.
The website provides advice on your rights, how to negotiate payments, how to deal with specific debts such as mortgages or utilities and helps to put you in touch with a financial counsellor. All free!
If you want to take the private route, a good financial counsellor will be able to create a budget, speak to creditors on your behalf, explore options and prioritise which debts to pay first.
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Other free options the government provides are the Mob Strong Debt Helpline, 1800 808 488, and website for Aboriginal and Torres Strait Islander people, the Small Business Support line, 1800 413 828, and website and the Rural Financial Counselling Service.
Another great government resource is moneysmart.gov.au. As well as handy advice for when you are back on track, it also provides advice on how to access crisis payments and support services.
If you need free legal advice, Moneysmart provides a state by state guide on where to go for help.
What you should not do is take on more debt to pay for debt.
Don’t put your payments on a credit card and don’t take up a buy-now, pay-later scheme. The interest on these options will simply dig you into a bigger hole.
If you are considering debt consolidation, it will pay to do your research.
Make sure the company you are signing on to is well known and has a good reputation. An easy way to check is to make sure the company is a member of the Australian Financial Company Authority. According to Moneysmart, this means you can make a complaint against them and have an independent resolution if needed.
Moneysmart’s advice is that if they are not a member, don’t deal with them.
It’s also good to make sure you are paying less interest on any new loans, not more, check if there are penalties for paying a loan off earlier, the fees and what the loan is secured against.
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Another option is debt management services. Once again, do your research. There are some free services out there, but your situation may be better suited to a professional operation. Whatever your choice, examine the contract carefully and seek further advice if you are not certain.
For any debt you owe the government, such as tax, the good news is, unless you are in masses of debt, or have been fraudulent about it, the government has almost no interest in taking any of these issues to court.
Government agencies have long worked out that it’s too expensive and time-consuming to ligate and almost always negotiate a settlement.
However, they are not letting you get off scot-free, there will doubtless be conditions and your credit rating will be trash.
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