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"We paid off $30K in credit card debt"
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By MyBudget Editor

Aaron and Jake found themselves with six credit cards and a mountain of debt. Creditors and collections agencies were hounding them and it felt like they were running in circles. Even catching up with friends was stressful because they had no spending money. Exhausted and with no solution in sight, they were on the verge of declaring bankruptcy. But in three years, they’ve paid off three of their six credit cards and close to $30,000 of debt. The couple are now excited about saving for a house and starting a family. So, how did they do it?
 

Acknowledge the problem

It might be tempting to hide your head in the sand and hope that your money problems will go away, but financial issues rarely fix themselves. In fact, while you ignore the problem, interest and late fees are usually snowballing and the situation is getting worse.

In Aaron and Jake’s case, they reached breaking point after doing a credit balance transfer. They failed to close the old cards, maxed them out again and doubled their debt.

Jake and Aaron are not alone. Research recently conducted by media company Mamamia found that 81% of Australians struggle to pay bills, and 78% find it hard to save. These findings correlate with the top reasons people state they seek the help of MyBudget: 

  • Reason #5: To remove stress
  • Reason #4: Saving to travel
  • Reason #3: Housing
  • Reason #2: Paying off debt
  • Reason #1: To build up savings and emergency money

Ask for help

Asking for financial help can be difficult—nobody wants to feel they can’t manage their own money. However, the fact is that very few people have the knowledge to deal with a money crisis. Coupled with inexperience, creditors chasing you and bills piling up, it’s hard to see the situation clearly, let alone come up with a strategy.

In Aaron and Jake’s case, when they came to MyBudget, they experienced the relief of “having someone not judge us and make us feel embarrassed—they [MyBudget] were just very empathetic and assured us that something can be done”.

Set achievable goals

There are no one-size-fits-all solutions when it comes to dealing with debt. After all, we all have our own unique situations and backgrounds. The best approach is a tailored plan that relieves stress immediately and puts in place a workable, affordable strategy.

When people come to MyBudget for a free consultation, we sit down with them, look at all of their bills and debts and come up with a plan. Once we’ve created a budget, we can test different debt reduction strategies. 

The advantage of having your finances mapped out in front of you is that you’ve got all the information you need to make a clear, well-informed decision. The situation becomes less overwhelming and you can choose the best option for you.

In Jake and Aaron’s case, they decided, in Jake’s words, to “focus on one credit card at a time and have a few paid off by the end of each year.”

Work out your needs from your wants

Aaron says that one of the keys to getting on top of their debt was to understand the difference between needs versus wants and holding each other to it. “If we couldn't afford it at the time, we would go without,” Aaron explains.

Aaron and Jake have found that budgeting gives them the visibility to see where their money is actually going. Like a lot of people, they were surprised to see how their “little” expenses added up to thousands of dollars a year. Instead of spending first and worrying (a lot!) about how to pay for it later, they now have a workable plan for their money based on their priorities and financial goals.

Want some tips for making your budget workable? MyBudget founder and Director Tammy Barton recommends:

  • Automate as much as possible—“set & forget” is key
  • Keep your savings in a separate, difficult-to-access bank account
  • Set up a regular auto-transfer or payroll deposit into your savings account , before the money touches your pocket
  • Build up a savings safety net equivalent to three or four months income—this  is how you build flexibility into your budget
  • Make sure you budget for fun stuff too!

Look forward to the future

Dealing with their debt has given Jake and Aaron a new perspective on money. Jake says, “For the first time, we’re planning holidays, and not even thinking about a credit card. We now see the value in saving.”

For Aaron, it’s the exhilarating feeling of having freedom to make choices. He says, “Being debt-free allows spontaneity in our lives without feeling like we couldn’t afford it or shouldn't do something,”

When budgeting is done right, it produces the feeling of freedom that Aaron and Jake are describing, where working towards your goals is coupled with caring reassurance that you’re making healthy financial decisions, day-by-day. 

Are you ready?

The majority of MyBudget clients pay off 91% of their unsecured debt in three years. 

We help you deal with creditors, pay down debt and build up savings by designing a flexible budget to suit your financial goals and lifestyle. More importantly, you get the caring support of our money coaches who do the heavy lifting and keep you on track to achieve your goals faster.

If you’re struggling with debt and don’t know where to start, Aaron’s advice is, “Don't be afraid to ask for help. It may be the hardest part of your debt-free journey, but it's the most important.”

To find out more call us on 1300 300 922 and request to speak with a caring money management expert about putting together a tailored budget plan. Remember, we’re always here to help!
 

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