A leading financial expert has shared six of his simple wise tricks to help Australians get out of debt and get back on track.
Glen James, a former financial advisor and host of the top-rated Millennial Money podcast, says now is the perfect time to organize your money after the financial impact of Covid.
In his new book Sort and Invest Your Money, he provides a practical, ‘BS-free guide’ to getting your finances in order and outlines ways for you to eliminate debt and move forward now – from side hustle to selling old stuff. Gum tree.
Glen James (pictured), a former financial advisor and host of the top-rated Millennial Money podcast, says now is the time to get your money back after all the financial impact of Covid.
SET A TARGETED BIGGER THAN YOUR DEBTS
One way to focus on paying off debt is to have a bigger goal than the debt itself.
A useful goal is to add up all your debt and your total monthly repayments and do a basic calculation to calculate how many months it will take to clear your debt.
Your challenge is trying to cut that time in half.
Since we want to throw everything into your debt clearing campaign, you have to consider that you want to do some things financial or non-financial after you pay off each debt, and you should also celebrate when it’s all over. debt.
Use a blank piece of paper to write down a few prize goals.
Because we want to throw everything into your debt clearance campaign, you should think about some of the things you want to do – financial or non-financial) – after you pay off each debt, and you should also celebrate when you are fully. from debt
PULL THE BUDGET HANDLE
There are four levers you can pull from a budget to make changes so you have more money to borrow.
You can increase your income with a salary increase or a second job.
You can reduce your savings because you shouldn’t really be saving while trying to get out of debt.
You can reduce your costs by examining the categories in your budget. Need a personal trainer and gym membership?
And you can cut something completely. Sticking to the health and wellness examples, you can choose to cut this category out entirely when attacking your debt. This could be deciding to leave the gym and PT and go for a run to stay fit, or pick up some weights for the back deck.
What are the biggest mistakes first home buyers make?
Having consumer debt: A deposit is usually required to buy a home. This or a parent Guarantee. Consumer debt cripples many people, especially millennials. What people may not realize is that for every $10,000 in consumer debt you have, your borrowing power can be reduced by $40,000.
Borrowing more than you can afford: There is often a difference between what banks say you can borrow and how much you can actually pay. The internal ‘responsible lending calculations’ of some banks and lenders are not quite real world. When you want to buy your first home, try to keep your monthly mortgage payments below 30 percent of your after-tax household income — 25 percent is ideal if possible.
Not having a ‘buy’ strategy: You really need some kind of strategy when buying your first home. If you are buying a house to live in, will it be used as investment property in the future? You should talk to your mortgage broker or financial advisor to make sure you have the optimal structure.
Not having an ‘exit’ strategy: Buying your first home is very exciting. You have a roommate; there are arguments over a wine; and the next minute you are buying a house together! What could go wrong? ‘Chat’ does not mean who buys dish soap; rather what is agreed upon if there should be an exit from the property. Get everything in writing and have an ‘exit’ plan if someone needs to be saved.
Making quick purchases when you move: You have a beautiful new place you want to call home. Wonderful. Don’t let this event get in the way of your finances by hooking up your cash flow with new ‘things’. There is only one time when you should use interest-free programs, and then: never.
BACK TO GUMTREE
What cr*p (i.e. ‘valuables for others’) are there that you can remove from your life?
If it hasn’t been used in 18 months and it’s not a family heirloom, sell it and invest the money in paying off debt.
You can always buy more cr*p later when you’re out of debt. And to reflect on the fact that you’ve got your financial life in order, think about how great you’ll feel after tidying up your house and garage.
If something you haven’t used in 18 months isn’t a family heirloom, sell it and invest the money in paying off debt.
LOOK AT YOUR CURRENT SAVINGS
If you’re in consumer debt on the one hand and have cash savings on the other, it’s probably because you don’t have a solid monetary system and/or you’re conflicted and have a tangle of logic and emotion. in your mind.
No problem. It can be terrible.
Start by deciding that you’re not saving any more money, and each payment allocates your savings money to your debt.
BUY A SIDE HUSLE
Side hustle is when you work alongside your regular or main job and ‘rush’ to earn additional money or advance your career. I’m not a fan of chasing a side hustle for the sake of it. I believe there are a few specific reasons why you should do a side hustle.
A side hustle can save you extra money to get you out of debt and save for a short-term goal. If a side hustle grows exponentially, you have the opportunity to quit your main job and pursue your own business 100 percent of the time. You can also invest your side hustle income into investments.
If you’re doing a side job to pay for meals, rent, and other day-to-day expenses, it’s important to understand that it’s really just a second job.
This could be a sign that your expenses are higher than your income, which may mean that you need to consider reducing your expenses or that you are underpaid.
Now you can start cleaning up your mess. In fact, you can tell people your side hustle is ‘debt cleaner’.
Edited excerpt from Sort and Invest Your Money by Glen James (Wiley, $32.95), where all good books are sold.