A practical guide to getting out of debt

Via MyBody+Soul

Welcome to Hit Refresh. This month, we'll be bringing you articles created by experts that will help you live your best life in 2018. Today, finance and money expert Vanessa Stoykov tells us how to get out of debt - once and for all - in 2018.

Debt is one of those things that can have a huge emotional impact on your life. Debt used well, as a way to leverage your access into things like a home can be a good thing. As long as that mortgage isn’t crippling, it’s an excellent way to access home ownership. Debt for constructive investments that employ people and create things is also good debt. It has a purpose.

But debt in the form of credit card debt and personal loans can be debilitating. Usually the shine of the purchase has worn off well before the payments to the credit card are completed. It traps people into a cycle of paying for things long after they have been consumed, and having to keep using debt to keep spending.

It took me a long time to understand that credit cards don't equal having choices - in fact they limit your choices. Whatever you buy on credit ends up costing you at least 20 percent more when you only pay the minimum off. The only useful thing a credit card can do is give you rewards, or frequent flyers. I still use one, but I pay it off the same day. Yes, that’s right, the same day.

Internet banking gives you instant access and the minute I see a charge on that pesky card, I pay it off. Because I understand the burden debt puts on you, and the mental load is significant.

If you want to clear you debt and make 2018 the year you get that monkey off your back, you are going to need a plan. Here are five steps you can take to make a debt-free life a reality:

1. Don’t keep racking it up. I mean it

Stop spending on credit. Take the cards out of your wallet and pretend you don't own them. This is the first and most important step to getting out of debt. Until their balance is zero, you cannot put them back in your wallet.

2. Add up how much you owe between cards and personal loans

Look at the minimum payments you are paying for each. January is a great time to take up offers of 6 months interest free on balance transfers, or talking to the bank about rolling all your debt into one personal loan at a lower interest rate. Don’t accept the status quo. Look for ways to bundle your debt and get a better deal. That way you can afford to pay off more than the minimum.

3. Do some numbers

How many months or years will it take to pay off your debt if you pay X? How about you if paid more? Do some simple calculations and figure out the timing on when you can be debt free. If you need help here, ASIC has put together some good calculators to help you figure this out on moneysmart.com.au. Once you settle on the most you can pay, highlight that date – write it on the wall, in your phone and on your desk. This is a date you need to be focused on and working toward. It will help your mindset greatly, and keep you on track for becoming debt free!

4. Change your plans till it’s done

If you are spending valuable funds on items that don’t make you truly happy, or add long term value to your life, stop. The desire for the latest clothes, makeup, food, movie or dinner out is holding you back and keeping you in debt. Make the mental decision to stop spending your hard earned money on these things and funnel it into your debt until it’s gone. While you will feel some short term pain, the feeling of being debt free is so good, you won’t regret it. Debt free means you have choices about how you spend your money and your time.

5. Do you have any savings

Because if you are paying off debt, but slavishly holding into savings, you are costing yourself money. The interest on your debt is increasing your burdens. Keep a small amount aside for peace of mind, but use your savings to dump your debt. Then you can start saving in earnest.

The hardest part about getting out of debt is making up your mind to do it. It’s like losing weight – it’s not fun, but neither is it rocket science. You have to really want it, and take action to get there. Speaking from someone who has done, I can tell you, it feels great.

Vanessa Stoykov has worked in financial services for 24 years as a storyteller and educator. Her website has valuable tips and resources to help you unlearn back mistakes with money and start growing your long term wealth.

- End -

For further information, please contact:


Related News /

Vanessa Stoykov premieres new book

10 April 2018

No More Practice Education are proud to announce the launch of Vanessa Stoykov's debut novel, The Breakfast Club for 40-Somethings.

The ad....

Read now

5 questions that are guaranteed to save you money

02 March 2018

Via MyBody+Soul

Sometimes asking yourself the right questions is all you need to do to improve things in your life. And if you don....

Read now

Save $10,000 by the end of year! Finance expert shares the simple tips on how YOU can put away $200 a week

21 January 2018

Via Daily Mail

Now that we are properly into the work year and the holiday season has been and gone, you may be thinking about your finance....

Read now

Wealth management expert Vanessa Stoykov shares financial tips

23 January 2018

Via Daily Mail

Australian Wealth management expert Vanessa Stoykov shares financial tips and the importance of taking sav....

Read now