This article has been kindly provided by Katie Conroy of advicemine.com
Getting into debt is a common problem that can be difficult to solve. However, with the right tools and information, resolving your debts before buying a home is possible. To do so, you’ll need to change your habits and learn how to budget.
So, if you’re looking to buy a home in Australia within the next six to 12 months, here are five tips to get out of debt from Proteger Financial Solutions.
1. Make a Budget
When you create a budget and strictly follow it, you ensure you’re spending less money than is coming in. To make a budget, write down how much income enters your bank account each month and the total cost of your recurring expenses. Once you know how much is left after your fixed expenses are paid, you can budget for nonessential purchases like entertainment and dining out.
2. Get Your Priorities in Order
Prioritizing which debts need to be paid first is essential. And the interest rate on your debt should be the main factor influencing that prioritization as it will ensure you save the most money possible during your repayment journey.
However, some people like to pay off their smallest debts first in order to feel they are achieving something and taking steps in the right direction. This is called the snowballing method.
3. Speak to a Professional
It’s easy to get into debt, but much harder to get out again. Therefore, it can feel overwhelming trying to get out of debt by yourself, particularly if you want to buy a house within 12 months.
So, if you’re not sure where to start, consider speaking to a debt professional who can help you budget and advise you on getting out of debt as quickly as possible.
4. Build Your Credit
Another downfall of getting into debt is the toll it takes on your credit score. Many fear they won’t be granted a mortgage because of their low score.
To rebuild your score, ensure you:
- Pay all of your bills on time
- Consider opening a secured account
- Don’t max out your credit cards
5. Saving When You Buy
Even after securing a home loan, try to save money where possible to prevent entering debt again.
One common mistake people make when buying a home is purchasing a property as-is. While certain Australian states require disclosure of defects and make certain disclosures mandatory, other states, such as Queensland and Western Australia are much less formalized. Unless you do your due diligence, you may later find major problems for which you’re responsible, including:
- Structural problems
- Mold or mildew
- Pest infestations
Either way, it’s recommended to engage relevant professionals to do a thorough inspection of your potential new home before settling the purchase.
Learn to Manage Your Debt Today
Getting out of debt can be a long and convoluted process. However, with the help of the reliable team of financial advisers at Proteger Financial Solutions, you can be out of debt in no time and into your new home.
If you’re looking to get out of debt before buying a home in Australia, get in touch today.
