It’s a dream many Australians strive for each day.
A dream of one day being able to say “I’m financially independent and no longer need to trade my time for money…!”
We work hard each day to earn our income. Some of us save and are focused on paying down the mortgage, while others sabotage themselves and end up in a never-ending pile of debt (credit cards, car loans, personal loans etc.) that seems impossible to get on top of.
According to the latest AMP and National Centre for Social and Economic Modelling Income and Wealth Report, the average Australian household debt is four times what it was in 1988. A rise from $60,000 to $245,000 after inflation.
If we’re working hard for what we earn but aren’t moving closer to some sort of financial security or freedom, we MUST consider why?
Here are some of those reasons:
Student Loan Debt
Ah the good old Higher Education Contribution Scheme (HECS)! The HECS loan removes up-front cost barriers to tertiary education and training by providing income contingent loans.
According to a report by the Grattan Institute, it found that current and former students have accumulated HECS debts of $26.3 billion. Up almost $10 billion since 2007.
Credit Card Debt
According to the Australian Securities and Investments Commission (ASIC), Australians owed around $32 billion in credit card debt. An average of around $4,300 per cardholder.
Imagine having an extra $250 per month in your pocket, rather than paying off the bare minimum with those interest heavy monthly repayments.
To reduce your credit card debt, ASIC suggests that you stop adding more debt to your credit card and pay more than the minimum repayment for your card. You can find out more by clicking on the following link:
Keeping Up With The Joneses
Personal finance icon Dave Ramsey once said, “We buy things we don’t need with money we don’t have to impress people we don’t like.”
Unfortunately, this quote resonates with a lot of Australians.
Mozo spokeswoman Kirsty Lamont says that Australians desire to spend up on life’s luxuries was resulting in weekly wages being whittled away by unnecessary spending. More than likely contributing to your unwanted credit card debt.
If you find yourself trying to constantly impress your friends, switch it up and try and impress yourself by seeing how much you can pay yourself into a savings account rather than how much further into debt you can get.
And remember, your real friends accept you for who you are and not for how expensive your watch is or how many pairs of shoes you own.
Vehicle Loan Debt
According to the Australian Bureau of Statistics, on average $1.28 billion of personal finance commitments was made towards new and used cars in 2015.
That statistic doesn’t even include the interest rate repayments that people will be paying in return!
We suggest buying a used car rather than a new one. After all, the new car smell will fade pretty quickly, but the higher loan payments will still be there.
Just remember to keep up on your maintenance & service bills to avoid the BIG mechanical repairs! They can really hurt.
Neglecting Your Credit Report
According to the Australian Government Office of the Australian Information Commissioner (OAIC), credit reporting is the information about an individual’s finances and credit-worthiness.
Under the Privacy Act 1988, each Australian is entitled to check their credit report for free once a year. So why do people neglect their credit report?
Some problems you might not know that may not be helping you in achieving financial independence include:
- someone might have stolen your identity to get credit;
- a debt might be listed twice or;
- the debt amount might be wrong.
ASIC has a list of options to help you check your credit report. Go to https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/credit-report
And this website www.getcreditscore.com.au is a great indicator of where you are at.
How can we help?
We hold regular live workshops every month in both Perth & Melbourne where Tim Guest (our Managing Director) works with people to determine their actual current financial position, their desired financial position, and how using nothing more than what they have available to them right now, they can achieve their financial goals.
If you are sick and tired of being held back by the constraints of your finances, then this is a must attend workshop that will transform your relationship with money forever.
Click here for Perth registration
Click here for Melbourne registration