Your first graduate job: 5 Money Tips
From reviewing your budget to keeping an eye on interest rates and talking to your lenders, here's 6 ways to help you improve your debt situation.
A great place to start is reviewing your budget and setting realistic goals and expectations for your finances. Ensure all expenses are included in the budget, including loan repayments. Review your general spending and look for areas of improvement. For example, if you are buying ready-made meals or takeaway can you substitute this for cheaper, home-made alternatives? It may not seem like much when you look at it individually, but each area of saving can add up to be a decent amount.
Once you’ve pinpointed spending you can realistically cut back on, you can then set a budget to guide your living costs and fixed expenses. This will help determine how much you have left over to make extra repayments towards paying off your debt.
It’s important to understand that debt can be used as a positive tool in growing your wealth. Taking advantage of interest-free periods on credit cards and getting the best rate possible for loans can be incorporated positively into a financial strategy. A financial planner can help with incorporating your debts into a strategy to help make the most of your financial situation into the future.
Prioritising the payment of debts higher in interest makes sense. It might also pay to look into whether consolidating high interest debts into one debt will help you save money and pay off the debt sooner. Bridges Financial Planner, Kim Hope, says that by simplifying your situation you may feel a greater sense of control over your finances.
It is possible to use a credit card as an interest free loan. It’s important to understand the ‘loan terms’ of the card to ensure you are in fact better off. Understand when you have to pay the money back and what will happen if you don’t. You can generally avoid paying interest by paying off the amount owing in full each month. Check out our previous post on the reasons why people use a credit card.
Keeping an eye on interest rates, understanding interest rates and switching your loans to take advantage of good rates could all work towards saving you money. It’s important to remember to look at all the information when shopping around for interest rates. For example, you may find a rate with a 0% interest offer period, but the rate at which you pay after that period may be substantially more than another offer – costing you more in the long run. Interest rates and offers can be confusing, so talk to somebody who can help you understand what is being offered. If you are still unsure seek further clarification and help.
Do not hold back from talking to your lenders if you are finding it difficult to make repayments due to change in income or emergency spending. By talking to your lender you may find ways to help consolidate debt and reduce the amount of interest you are paying.