Prosperous new year possible with advice from CUA
23 January 2008
Despite warnings, Christmas shoppers who overspent during the festive season are seeing the financial repercussions this New Year but it’s not too late to have a financially secure 2008 if the debt situation is addressed early.
According to Reserve Bank figures Australians owe a record $31 billion on interest rates of up to 19.9 percent following the Christmas period spending frenzy.
CUA Managing Director, Mr Graham Olrich said credit cards were the major culprits of debt at this time of year and emphasised the importance of ensuring debt was under control.
“With a potential rate rise around the corner it’s very important for people to get their finances in order and clear unnecessary debt like high credit card balances,” he said.
“The main priority for people in the New Year should be reducing their credit card debt by paying it off as quickly as possible and a good way to do this is to set up a direct debit with a portion of your salary going directly into your credit account.
“Even if it’s a small sum, allocate a set amount from your wage that goes toward paying off your debt regularly. Something is always better than nothing.
“If the situation is serious, debt consolidation is another option that can reduce the overall impact of the debt as consolidating all money owed into one loan structure makes it easier to manage interest levels and pay the total debt off more quickly.”
Mr Olrich said after the debt was cleared people should focus should on reviewing their overall financial status and developing strategies to improve it.
Once you’re out of debt, developing a well tailored budget is essential. Every aspect of your life should be budgeted so it reveals elements where spending can be reduced and the amount of disposable income a person generates.
“Also, planning and actioning a regular savings plan is key to establishing a solid financial position. A rule of thumb is 10 percent of your wage.
“People should aim to have their savings automatically transferred into a special higher interest savings account.
“Something to note is it’s important to keep a savings account separate to an everyday spending account if possible so you’re not tempted to spend the money.”
Mr Olrich said another important factor for establishing a secure financial position was to set realistic goals.
“People should take the time to assess their financial position and plan goals they want to achieve. This can be done at home or with a financial planner.
“No matter your financial status, a planner can help you create a strategy to achieve better long term success and a more secure financial position.”
He said a wise move for those who had been sucked into debt over the 07 ‘silly season’ was to start a 2008 Christmas savings account.
“To avoid getting into debt next festive season, prepare in advance by setting aside a certain amount of money each pay for Christmas spending.
“At the end of the year you’ll have saved enough for all your Christmas needs so you shouldn’t have to whip out the credit card again.”
