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Get Out of Debt - And Into a Home

These tips and strategies will help you pay off your personal debts, so you can jump off the rental roundabout and buy your own home!

1. Consolidate: If you're having trouble repaying a myriad of debts, a consolidation loan may be your best bet. A debt consolidation loan is the replacement of multiple loans and debts with a single personal loan. This means you will only have one repayment and if some of the debts you are replacing are credit card debts, the interest rate on the consolidation loan may be lower, saving you money.

2. Cut the commute: If your commuting costs are rising and your salary is staying flat, perhaps it's time to re-evaluate the real cost of getting to and from your job. A train or bus pass can set you back $30 - $50 per week. The same goes for the cost of petrol, road tolls and running your car. If you move closer to your job or find a way to car pool, you could save yourself upwards of $2,000 annually - which can go straight towards paying off your personal debts.

3. Eliminate your highest debts: You may have several debts such as credit cards, personal loans and overdrafts, each with their own varying interest rate. So, it makes sense to manage your debt by eliminating your higher interest debt first. This does not mean getting rid of your credit cards; this means shopping around for better products in the market. For example, don't settle for a credit card charging 25% interest when you can have a credit card charging 10% interest.

4. Direct your savings towards your debt: Most of us like the idea of having some savings in the bank, so you have a nest egg to deal with emergencies or unexpected expenses. But before you can really save, you must eliminate your debts. If you save money in a savings account, you will earn around 6% interest. Even if you invest in stocks and shares, the average return year-on-year is between 10% and 11%. You pay more than that for debt. Interest rates on credit cards and personal loans can be as high as 20% or more. So, if you are keen to eliminate your debts, consider using your savings to pay them off.

Source | Your Mortgage