How to bounce back from debt

We are living through precarious times. Entire cities are deserted, and schools are being closed. The coronavirus pandemic is impacting our world in a variety of ways, and has created a lot of financial instability as a result.

Do not despair – now could be a perfect time to consider managing your current debts. We have four simple strategies that may help you to keep on top.

1. Set a budget

Setting a budget and creating a repayment plan is the first place to start, to see how long it will take you to recover. You will need to be disciplined if you want to recover. Use an online budget calculator to help you do this. Include expenses like your income, home and utility bills, insurance, and groceries. Anything left over, can go straight towards clearing your arrears.

2. Tighten your purse strings

Review areas where you could save. Ask yourself, are there any subscriptions or memberships debited from your bank account that you no longer have use for e.g. pay TV, music and magazine subscriptions? Remember, these small amounts that are direct debited from your account on a regular basis, will stack up.

Ask yourself if there are any other areas where you can cut costs and instead put this money towards paying down your debt.

3. Consider consolidating your debt

If you’ve done your budget and the reality is you won’t be able to pay your credit card balances or buy now, pay later purchases before the interest free period ends, it may be worthwhile consolidating all yours debts into one repayment with a personal loan.

Generally personal loans have a lower interest rate and fees than standard credit cards and store credit, which can save you money. It’s also easier to budget with one repayment versus several repayments. Learn more about the difference between a personal loan and credit card, and what to consider when choosing your form of credit.

4. Plan Ahead

You may want to consider opening a Bill Paying account and separate your money for debts from your other accounts so that you’ll always have money put aside to pay for any recurring repayments. By opening a Bill Paying account you will be creating a plan to manage your financial obligations. We recommend you deposit a portion of your pay or income into this account regularly to ensure you always have enough money in the account when your repayments are due.

By putting a plan in place to tackle any debt you might have left over, you’ll clear that debt before you know it.

Need more help?

If you find you’re struggling with your current financial situation and need to talk to someone, our Credit Assistance service may be of help to you. We can look at your situation and offer support with regaining control of your Firefighters Mutual Bank loans and accounts.