Today we’ll be covering 4 of the top debts to avoid for Australians. We’re an advocate of being Debt Free in this community. It’s great that you’re here in this safe space!
Look – we understand. In the course of our lives, just about all of us are forced at one time or another to take some form of loan. This is to fund a home, car or just daily needs.
That said, it can lead to a pile up of debt for many people. It creeps up on you before you even realize it. Feels like you right now, yes? You’re not alone.
We’ll be covering the four types of debt that people need to avoid. Plus, we’ll even share ways to prevent taking out loans in the first place, so you can stop digging the bottomless pit that debt brings.
Credit Card Debt
This is Australia’s nightmare. Credit card debt consumes so many people, on so many fronts! It’s like an endless disease, permeating endlessly throughout society.
At least count, we owe more than $50 billion dollars. That’s extraordinary! Guess who’s winning? The banks.
Credit card debt promises luxury and an Instagram lifestyle with the tap of your card. It’s really that easy. Yet – so many people have spiraled into deep credit card debt.
These come with seriously high interest rates. This is because these debts aren’t secured. Credit cards are designed for those who love to spend money. Don’t be another victim, and consider starting the escape plan right now.
Car loan debt
This is the next one after credit cards. Australians love to own new cars, and often go into deep debt as a result just to impress their friends. The truth is – this comes at a price.
The car will be worth much less in 5 years, and you’ve paid more as a result through the loan. Ouch! Look – we get it, new cars do have more reliability. Often they’re better on fuel too. But the interest rates can often be high, making the car a huge liability.
We use the golden rule around here, direct from multi-millionaire friends. None of them got there by taking out car loans.
Their philosophy: A car should cost 5% of your net worth. If you’re worth a million dollars, then you can purchase a $50k car. You’ll be paying cash for that too. Puts things into perspective, yes? We hope we’ve woken you up.
Student loan debt
We’re very lucky here in Australia. The HELP system for university students allows our own students to study, then repay their loans once they start working.
These loans are done through the government and the interest is very minimal. In fact – it’s aligned with CPI.
That said, there’s some courses that simply don’t provide such help from our own governments. Some lenders have taken the opportunity to provide student loans to Australians with high interest rates. We recommend avoiding these wherever possible.
This is certainly the hardest debt to avoid. It’s hardly optional, and is based on unpredictability too. Insurance can certainly help here.
Australia does provide an excellent Medicare system to look after our own citizens. At the same time, it’s wise to save ‘rainy day’ money in your bank account. This can help offset minor medical expenses.
There’s not too many lenders offering medical loans in Australia. This is one debt that we’re actually alright with recommending, as long as you personally can justify it.
The WORST debt
Certainly the worst possible debts to avoid are those that you’re simply unable to pay back on time. Doesn’t matter the type – as long as you can repay.
If you’re struggling, then we can help you. Starting today, it’s time for this opportunity. We’ll hold your hand and help you through the process.
Get in touch today! We’re ready and waiting to help you on this new journey. We’re community-focused and understand your problems.