5 great tips for taking control of your debt
Hire purchase payments, car finance, store cards, different interest rates, payment times and amounts, it’s easy for it all to get away on you. Here are some tips that may help get debt under control, put more back into your pocket and may help you to ease any financial stress.
01
Get rid of debt that drains your bank account
- Pay off the debt with the highest interest first – you may find these are your store cards and hire purchase items.
- Pay off the debts you won’t incur again – like any high interest car finance.
- Take quick wins – pay off the debt with the smallest balance, it’s one less debt to worry about.
- Remember, you may still have to keep paying minimum monthly or fortnightly repayments on any outstanding debt.
02
Consolidate your debt
Rolling all your debts into one easy to manage loan could make sense.
- Just one monthly or fortnightly payment is easier to manage.
- You could save money by paying less interest.
Interest on hire purchase and store cards interest payments can often be over 20% p.a. whereas interest on an ASB Debt Consolidation Loan is less. Paying less in interest simply because you’re organising your finances in a smarter way could make sense.
Example
Ken and Sue had dealer finance for Sue’s car, and a 5-year hire purchase agreement for the kids’ new beds and a lounge suite. They didn’t pay anything on the furniture for the first six months as payments were deferred, but when it kicked in, it was a strain because the interest was so high.
The total debt was $20,000, they weren't repaying any principal and the interest rate was 23%p.a.; they had paid $4,600 in interest alone in the previous 12 months.
They rolled their hire purchase and car dealer finance into an ASB Debt Consolidation Loan. The interest rate at that time was 15.95%, so they were saving themselves nearly $1,410.00 in the first year alone.
They are putting some of that $1,410 towards a family holiday in Queenstown, which they are planning next year.
(Please note, this is not a “real life” example, it is for illustrative purposes only.)
Find out more about an ASB Debt Consolidation Loan.
03
Know your 'debt free' date
With an ASB Debt Consolidation Loan, you’ll be able to work out exactly when you’ll be debt free because your payments are regular and the loan is for a defined term. Marking your 'debt free' date on the calendar is a powerful way to stay on track.
04
Create a budget and track your spending
Creating a realistic budget for your household expenses may help prevent you overspending. Track your spending so you get a really clear idea of where your money is going. Refine your budget as you actually spend so it becomes more and more accurate.
If you’re an ASB customer, you can use Spend Tracker in the ASB Mobile Banking app. It will show you trends in your spending each month and automatically categorises your transactions.
You can also use Save the Change to round up your electronic (EFTPOS) purchases and the difference is transferred to your savings account.
Did you know?
You can use the money planning budgeting calculator on sorted.co.nz to plan your budget. If you would like some budgeting advice, your local Citizens Advice Bureau is a good place to start.
05
Know your debt traps - and avoid them
Do you tend to spend when you are happy? Do you spend more on meals than you should because it’s easier than cooking when you are tired? Do you shop on impulse? We all have debt traps; the trick is to know what they are.
Understanding your own debt traps may help prevent you getting back into debt, because once you understand your “bad” habits you can avoid them.
Apply for an ASB Debt Consolidation Loan
Visit a branch or book an appointment now
Visit us at one of our many branches, or if you're an existing ASB customer, book a phone or in-person appointment through either FastNet Classic Internet banking or the ASB Mobile Banking app.
ASB’s lending criteria, terms and fees apply. An establishment fee of $99 may apply. ASB Debt Consolidation Loans cannot be used to repay an existing ASB Personal Loan or repay loans from friends or family. Interest rates and fees are subject to change.
