If you’re feeling anxious about your debts, it’s time to start communicating. Here are five steps you can take to talk to your credit providers about debt.

1. Call your credit providers

If you’re feeling overwhelmed by debt, give your credit providers a call. It is in their best interests that you make your repayments, so there is no harm in having a chat.
Call your utility company, telco or lenders and explain your financial hardship. If the customer representative you’re speaking with is unhelpful, escalate your call to a hardship officer or manager.

2. Talk it through

Go through your options with your credit provider. They may be able to offer you more affordable repayment plans, due date extensions or hardship variations.

Many credit providers can amend their terms to ensure you can continue to pay. You might be surprised at the options they have available to you.

3. Aim to agree

By now you would have done a budget and know your incomings and outgoings. While the aim is to at least meet minimum repayments, you should have a good idea of what you can and can’t afford. Therefore, if there is no way you can meet your minimum obligations, you should negotiate alternative payment structures. And if your situation changes, let them know straight away.

4. If debt issues persist

If you’re still finding it difficult to get on top of your debts, you can reach out to the National Debt Helpline on 1800 007 007 or contact a Financial Counsellor. The National Debt Helpline can put you in contact with your local service.

5. Don’t be lured by quick fixes

There are many providers out there promising to consolidate your debt, refinance and transfer your balance. Some of these can be legit and may help you. But they can also add to your financial burden through hidden fees, higher interest and lock-in contracts.

Our advice: be aware! Don’t look at these options until you have spoken with your current providers about your situation.

For more tips on how to stay on top of your finances, sign up or log in to Credit Simple.

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Here are a few tips to help you ring in the new decade with as little debt as possible.

1. Reconsider whom you need to shop for

At different points in our lives, it makes sense to shop for certain people and not for others. For example, when our nieces and nephews are young, gifts are appropriate but when they’re adults, maybe a heartfelt card is enough.

Go through your list and decide whom you really need to shop for and who can make do with a heartfelt holiday wish.

2. Set yourself a limit – and stick to it

Now that you know who you need to shop for, set yourself a budget based on what you can reasonably afford. Set aside one “money bucket” for gifts, remembering to factor in the cost of wrapping paper, tape, greeting cards and the like

Consider a separate money bucket for food, drinks and entertainment. This includes eating out, coffees, treats, parties, costumes and movie outings.

Once you have your budget, stick to it. The whole point is to spend only what you can afford to spend.

3. Consider what people actually need

It’s often the case that people don’t really need, or even want, new expensive gadgets in their lives. If you consider what each person really needs, you may uncover creative and inexpensive ways to fill their holidays with cheer.

Maybe you can surprise your nostalgic mother by transforming all your old childhood photos into a digital scrapbook, or give your achy partner a massage based on a technique you learned from YouTube.

4. Shop online

If you do end up with a few physical goods on your to-buy list, consider buying them online. Not only can you often find better deals, but you’re also less likely to incur unexpected or hidden expenses like petrol, parking, eating out, that special gift to yourself and all those pumpkin gingerbread lattes.

But online shops want your dough just as much as brick and mortar shops do, so make sure you don’t get sucked into all the online sales and marketing gimmicks.Make sure you shop around for the best deals and buy only what’s on your list.

5. Do a Secret Santa

Secret Santas aren’t just for the office and the school yard; they’re great for families too. So if you really want to save money this holiday season, and help others do the same, consider a great big Secret Santa.

Ask everyone to write down their name on a slip of paper, along with two or three items they need (or they can simply write “surprise me!”) and throw those into a hat. This way, everyone can save a little money and no one is left with a useless gift they’ll just toss later.

6. Go potluck

There’s nothing wrong with wanting to entertain guests at your home over Christmas or New Year’s Eve. However, there’s no reason to splurge on all the food yourself. If you decide to throw a party, go ahead and cook a couple of your specialty dishes, but ask all your guests to bring something too.

7. Spend New Years in

You don’t need us to tell you how expensive it can be to pay for food, drinks and cover charges just to attend a fancy New Year’s party. Why not hang some mistletoe at home and have your party there?

You won’t have to put up with obnoxious strangers and you won’t have to stand on milk crates to see the fireworks on your big screen and most importantly food and drinks will be a fraction of the price.

Eat, save and be merry!

With some foresight and a little self-control, you can get through these holidays without burying yourself into a pile of debt you’d otherwise spend the next year digging yourself out of.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

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As the long weekend kicks off, it can be all too easy to fill your time with fun and frivolous spending. But before you know it, Monday night rolls around and your bank balance is looking more than a little depleted.

Luckily, it doesn’t take much to reset your default setting from ‘spend’ to ‘save’ for a few days, and the savings can be pretty significant. Read on for our tips to boost your savings in just a few days.

Skip 1 thing
You probably have a pretty good idea of which is your biggest discretionary spend. But what would happen if you skipped it, just for this weekend? It’s easier than you think.

For example, for many of us, a big money suck can be eating out. With 4 days off, you could find yourself eating out a couple of times a day and think nothing of it. With even your local cafe or Thai restaurant setting you back at least $20 a head. If you’re a couple or a family, you could save hundreds of dollars.

Only use cash
Studies show that when we use cash rather than cards, we feel the loss of money more. This is because cash is a physical, tangible thing you have to give away to pay, while credit and other payment methods feel hypothetical or even non-existent.

Switching to cash not only makes it easier for you to mentally track your spending, but if you take out a set amount at the beginning of the long weekend, it makes it much easier to stick to a budget.

Take the zero-spend challenge
This one’s a game changer. For a single day (or even the whole weekend if you feel like an epic savings challenge), don’t spend a single cent and see what happens.

As an added bonus, you’ll find that (as long as you have a well-stocked fridge and ready access to a car or public transport) that the possibility for free activities are almost limitless. Make your own coffee, go for a run, fire up netflix, have some friends round or chill in your local library. It can be a really fun experiment.

Apply the ‘clean slate’ principle
If you spent Friday-Sunday on a bit of a spree, that’s actually ok – studies show that at the beginning of a week, month or any time that feels like a ‘fresh start’ is the perfect time for habit change.

With that in mind, Monday or Tuesday may be the perfect time to set up a new budget or set and ambitious savings goal, especially after a few days of spendthrift-madness.

So go on, take the challenge – enjoy a low-spend long weekend. It could save you heaps!

The post How to enjoy a low-spend long weekend appeared first on Credit Simple.

If the school holidays have you fearing those dreaded words, ‘I’m bored!’ but you know you don’t have cash to spare, never fear – a quick Credit Simple brainstorm is all you need.

Check out our top 5 tips to help you survive – and thrive – during these school holidays, with your budget and savings well and truly intact.

1. Get out and about – for free
Whether you’re planning a vacation or a staycation, the school holidays are the perfect time to get out and enjoy heaps of free and low-cost activities on offer. From kid-friendly museums and galleries, to parks, adventure playgrounds, libraries, national parks and even that ol’ favourite, the beach, you could easily fill a whole day (and ensure the kids are well and truly tuckered out) for the cost of a car trip or a bus ride and your byo sandwiches.

2. Try backyard camping
An old-school family holiday might not be in the budget this month, but there’s no reason you can’t drag the camping gear out of the garage, or borrow some from a mate, and have your own backyard camping adventure. This idea is perfect if you small kids who might not be used to being away from home – their beds are just metres away. There’s no stressful car ride required, and it’s a risk-free option that won’t be spoiled by bad weather.

3. Enjoy a crafternoon at home
This trendy pastime (a combo of the words ‘craft’ and ‘afternoon’) is not just for pinterest-obsessed twenty-somethings – in fact, it’s beyond kid-friendly. Especially if the arvo looks gloomy, a bit of craft can go down a treat with the young and young at heart. The best bit? There’s not much skills and very little money involved. Crafternoons can include painting, drawing, origami, The only limit is your imagination – google ‘crafternoon’ and you’ll see what I mean.

4. Have a movie marathon
Find me one kid that doesn’t love to veg out in front of their favourite movie or binge their fave tv show with a bowl of freshly-popped popcorn on the coffee table. Whether you fire up those streaming services or crack out the DVDs, each kid can pick their favourite movie or show for some much needed family chill time. If it all goes well, why not make it a regular event?

5. Go bush
Bushwalks are a brilliant way to explore the natural world on a budget. Just grab the sunscreen, insect repellent and plenty of water, load up the car with the bits ‘n bobs you need for a BBQ or picnic, and hit the road for an awesome family day out. Pro tip: make sure you let someone know where you’re going and when you plan to be back.

Hopefully these 5 cheap school holiday activity ideas get you thinking of even more fun, free idea to keep the kids occupied.

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Last week I paid for an upcoming ski holiday in Canada. The trip isn’t until next ski season but it has to be paid in advance. Skiing in Canada is my idea of nirvana, so it wasn’t too painful to see the thousands of dollars flowing out of my account; after all, it’s going to a good cause.

But this week, my car decided it needed a wheel bearing replaced plus a wheel alignment and new spark plugs. Then my dentist informed me that my eight-year-old root canal has failed and will need to be redone. It felt like my bank account was haemorraghing and the rescue helicopter was out to lunch.

As I write this, I’m texting with a friend who is sitting in an all-staff meeting being informed there will be mass redundancies due to bad management of the business. Just like the wheel bearing and the tooth, it’s out of his control.

But he’s feeling fine about it, because last time he was made redundant, he picked up another job straight away, so he put the redundancy money into an emergency fund and hasn’t touched it since. That’s a rare – and comforting – position to be in.

We live in an uncertain world and we’re subject to outside forces that will mess with our finances – if we let them.

Building an Armageddon Fund – an emergency fund for when stuff like this happens – is a lofty and intimidating goal for many people, but it pays dividends when the proverbial hits the fan.

What would you do if, right now, you lost your job, had a health emergency or illness, if your car died or you had a major household mishap?

Having money to cover emergencies means peace of mind and less stress, and having a financial safety net means you can avoid having to use high-interest sources of money (such as credit cards) just to get by. It also means independence (read: not having to beg your family, friends or partner for money)!

How to build an emergency fund

Financial institutions don’t necessarily make ‘emergency fund’ accounts, but you can easily create your own. You want it to be highly liquid so it’s easily accessible, which is vital in urgent situations. Make sure you have a debit card so you’ve got instant access to the cash.

Financial experts say you should have three months’ worth of living expenses in your emergency fund. Some even say you should have eight months’ worth. But after three months’ worth of money, your cash is better off sitting in higher-interest areas. So consider having two funds: a short-term, highly liquid fund and a longer-term, less accessible but higher interest fund.

It can be hard to get started building an emergency fund; after all, there’s always something else you’d rather spend the money on. Start by setting low goals, at least initially. Aim for, say, $250 within six months.

“But I don’t have any spare cash!” you say. OK, but if you’re living paycheck to paycheck, it’s even more important for you to build up an emergency fund. First, look for ninja ways to trim your expenses and free up some cash. Then commit to putting away $10 each week. That’s $520 in a year, plus whatever interest it has earned. That’s the cost of the mechanic bill I mentioned at the beginning of this blog. Puts it into perspective, doesn’t it?

Once you’ve got the fund built up, don’t touch it unless it’s a genuine emergency. A new flat-screen television (or a ski trip to Canada!) doesn’t qualify.

Then sit back and relax, knowing that your next financial crisis is already taken care of.

The post How to build an emergency fund (and why you need one) appeared first on Credit Simple.

Buying yourself a set of wheels is expensive. If you’ve saved the cash to buy the car, that’s great. But realistically, most young people have to borrow money to buy a car. If that’s you, brush up on a few things before you sign on the dotted line.

Save
Saving up and paying cash is the cheapest way to buy a car. Ask around and you’ll find friends who have done it. Surprising, huh?

Downgrade your expectations
We know you want to buy a Beemer with mags to impress your mates. Who wants to look like a nana, after all? If you have to borrow, then spend as little as you can. The smaller the loan the less interest you’ll pay and the more money you have to spend on other stuff, or even save. Don’t fool yourself into thinking you ‘need’ to upgrade when really you just ‘want’ a nicer car. The law of Bangernomics says it’s almost always cheaper to repair an older car than upgrade on finance.

Read everything
Loan paperwork can have all sorts of tricky clauses in it. It’s best to know what you’re signing. Otherwise the fine print could come back to bite you.

Keep your credit record clean
It’s always easier to borrow if your credit record is squeaky clean. If not, you might need to get someone else to go guarantor (i.e. promise to pay if you can’t) and that’s not always easy.

Check out the bank of mum and dad
It’s time to do some dishes, and buy Mum flowers. The cheapest car loans almost always come from parents. If Mum and Dad don’t have the dollars, they may be able to extend their mortgage to pay for your car. If that’s the case you’ll pay around a third of the interest you would through a bank. Choice. Just be aware that your parents could lose their home if you don’t pay.

Car yard finance
As soon as you set foot on a car yard they’ll ask you how you’re going to finance your purchase. That’s because car yards and auction rooms often make more money out of your finance than the car itself. We know it’s easy to take the finance on the spot. But chances are it’ll cost you heaps in extra interest and charges. It’s best to get your finance pre-approved elsewhere before you go shopping. That way you can bargain your purchase price down.

Borrow from the bank
Loans from the bank are usually at lower interest rates and fees and better terms than from finance companies and car yards. This isn’t always the case. Regardless, always go to your bank and ask the question.

Get your money from a credit union
Credit unions are the complete opposite of spivs in suits selling easy finance. They’re required by law to put your interests first and they’ll often help you work out a budget for free. Staff will even sometimes haggle with the car yard on your behalf.

Make sure you can pay it back
Whether the loan is with the bank, a finance company, the car yard or even Mum and Dad, only borrow if you can afford to make the monthly payments. You’ll lose lots of money if the car is repossessed. The shorter the loan the less you’ll pay in interest overall. Try to choose a loan that allows you to make penalty free extra payments whenever you can.

Watch the fees
Car loans come with nasty set-up fees that can be as high as $700 and there may be other eye-watering charges if you miss payments.

Beware of the payment protection insurance
It’s too easy when you’ve fallen in love with a car to sign any paperwork put under your nose. If you have, you’ve probably just agreed to pay for overpriced payment protection insurance that covers you if you get sick or lose your job. Car yards, banks and finance companies often sell this cover to anyone, even if they’re not covered – which is the case for many self-employed people. There are cheaper ways to get better cover. Mechanical protection insurance is another expensive cover often tacked on to the sale automatically at some car yards. Just to make matters worse, you usually pay for both of these insurances upfront and can’t get a refund if you sell the car early.

Do background checks
You can run a variety of background checks online, and although it will cost you (for example $29 at carfacts.com.au), you’ll get peace of mind knowing you’ve sussed out whether it’s been stolen or written off, or if the odometer is correct. You’ll also be able to find out if there’s finance owing on the vehicle. And know your rights when it comes to vehicle disputes  –  this is done by state, for example click here for NSW’s info and here for Vic.

Now it’s time to go shopping for your first set of wheels.

The post Funding your first set of wheels – what you need to know before getting a car loan appeared first on Credit Simple.

A friend called me the other day in a panic because he suddenly realised he owed more than $2,000 on his credit card and had no way of paying it off in a reasonable fashion.

“You work in finance,” he said, “what am I supposed to do now?”

First I made him do the calculations to see how much interest he would pay on that $2,000. He’d blown it on dinners, drinks, and a new smartphone he didn’t need, and those items were now going to cost him more than ever. And at 19.95%, paying off the balance was going to be punishing. (He might have cried just a little bit.)

I pointed him towards a balance transfer credit card, which would allow him to transfer his existing debt to another credit card company (or bank) and repay his $2,000 debt at either a very low rate or at 0% interest.

It worked for him, and now he’s paying down his debt at $170 a month so he can wipe the balance within a year.

Sounds good? Here’s what you need to know about balance transfer credit cards:

• • You’ll need to switch banks or credit card companies to get the low/no interest deal on your existing balance. This is so they can have you as a new customer and hopefully establish a long-term relationship with you.

• • You can use the new card to consolidate debts into one payment (such as store cards and multiple credit cards).

• • Sometimes (but not always) you’ll be charged a fee to transfer the debt(s), such as a percentage of the balance being transferred.

• • There’s usually a balance transfer period, when you’ll pay no interest or a low interest rate. Be mindful of what the interest rate is after the balance transfer period lapses. This is all specified in the offer and the terms and conditions.

• • The balance transfer interest rate can apply to the debt you’ve transferred, to new transactions, or both. Check it.

• • It can be extremely swift to sort out a balance transfer, but in some cases it can take up to two weeks, so make sure you keep paying your bills in the meantime.

• • It can be tempting to ‘chase’ balance transfer offers and just keep shifting the balance around. This doesn’t look good on your credit report and it damages your credit score, so try to transfer only once, then pay down the debt.

• • Transferring the balance doesn’t necessarily mean you’ve closed the old account, so contact your former credit provider and make sure it’s sorted.

• Top tip: You can check and compare a raft of balance transfer deals here.  www.canstar.com.au

All in all, a balance transfer credit card can be in your favour, to help you consolidate debts and pay them down. It’s all about how you put it to work.

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