Why Now is a Good Time to Assess Your Personal Debt
This blog is all about Why Now Is A Good Time to Assess Your Personal Debt! Getting into Debt often seems logical. You need a car, you have a job, you can afford the repayments, so why not?
What are the alternatives, I mean you need the car now.
So how much should you borrow? Often the fall to the bottom of the ‘debt mineshaft’ starts here.
As you start to dream about what car you’d like to buy, you start looking at the repayment amounts and dreaming more and thinking well I can afford a bit more. Then you go and look at some cars and the sale person opens your mind up to the fact that you really don’t want to go bottom of the line – why not upgrade to the next model – I’m sure I can get you the loan you need to upgrade. And the extra’s, well you’ll need those too right – just a little more for that then too.
And then you get the car and it’s amazing – now what about that holiday? I can afford the repayments…
If you have personal debt – you know the story.
COVID-19 has thrown many into tough situations and it’s set to continue – although we are starting to re-open much remains uncertain from talk of a second wave to our dependency on other countries performing as well as we have so far so we can see ‘the recovery of international tourism, the retention of trade relationships, the reinstatement of international student flows and the restitution of the hospitality, arts and entertainment industries.’ (Bernard Salt article in the Australian 18/5/20).
The Australian government has done a lot to try and help including the ability to withdraw $10k of superannuation before 30/6/20 and another $10k after and lenders have stepped in too providing many Aussies with relief via repayment holidays of up to 6 months – NAB alone has approved 80,000 of these.
Which brings us back to where I started the article – Why now is a good time to assess your personal debt – the global situation right now is one that most of could not have predicted. If you have been affected and you have personal debt in the shape of personal loans, credit cards and other facilities such as AfterPay life will be starting to get very uncomfortable.
Unfortunately, it’s when the unexpected happens that we start to see that our desire to have things ‘now’ – to feed instant gratification and to buy into the messaging that the c.$2,994 billion consumer credit market wants you to buy into – you CAN afford to have it NOW – was flawed. Because we didn’t stop to look at the risk involved. We assumed we would have safe employment at the current salary forever. And we didn’t truly consider the interest that we would pay (and therefore lose forever) to get the car now.
So, what was the alternative? Planning ahead for when we would need the car, learning to budget, saving up the amount we needed, making a decision about what we could afford based on the money we had saved, and buying the car outright. And the added bonus of earning interest on the money we are saving AND not paying our hard-earned cash to a lender in interest. On a loan of $10,000 at 12.69% (the current rate of a top 4 lender) paid over 5 years, you would pay $3,607 in interest) – you can count the cost yourself here in future before you decide to take out a personal loan.
I believe that now is the perfect time to reassess your attitude towards personal debt – to take the time to know that even though you can’t change the past you CAN move forward with a healthier attitude towards debt – one that will see you out of debt and truly moving forwards to financial security debt-free.
If you have personal debt and want to get out of it a great first step would be to get your hands on the Ditch Your Debt Freebie or jump over and take a look at my programs.