RaboDirect research reveals people may be taking on more debt yet becoming more comfortable with this debt
Greg McAweeney
Results from the 2014 RaboDirect Financial Health Barometer (FHB) have uncovered a national picture about levels and attitudes to debt amongst Australians. According to the research, 23% of people claim to be more in debt than 12 months ago.
Key points
- 23% of people claim to be more in debt than 12 months ago and a quarter of all Aussies say nothing they do will make a big difference to their finances.
- While the research revealed that we’re taking on more debt than ever, it also showed there was only a slight improvement in terms of our levels of comfort to repay it. In 2014 the research found 14% were uncomfortable with their ability to repay their debt, compared to 16% in 2013.
- 35% percent of Gen Y and Gen X claim to feel like they are always in the red compared to just 21% of Baby Boomers.
- 36% of Aussies claim they live pay cheque to pay cheque, while 37% admit they scrimp and save to make ends meet.
Greg McAweeney, Group Executive RaboDirect, says the beginning of a New Year is the perfect time for Aussies to take stock and get their financial house in order.
He warns that our attitudes to debt may have seen too many of us starting 2015 in the red, especially after the festive season when personal budgets might have spiralled out of control.
“While debt is a fact of life for most people, the way it is managed can mean the difference of being in financial control or being out of control. There are simple tips for ensuring you get on top of your debt and stay out of the red,” says Mr McAweeney.
To stay in the black, he provides the following top five tips:
- Consider your cashflow! If your income every month is less than your debt and spending outlay you need to find ways to reverse this. You should only ever spend less than you earn!
- Pay down your higher debt first, e.g., hefty credit card debts with interest rates of 20% or more.
- If you have multiple credit cards get rid of them. They come with fees and tempt you to rack up debt to fund your lifestyle. Consider products that also help fight the temptation to spend on impulse – savings accounts that keep your money at arm’s length!
- If you have an expensive car that’s slugging you with big repayments swallow your pride and trade down to a car you can actually afford.
- Look for ways to restructure debt. Talk to your bank about different repayment plans or try and refinance somewhere else for a better deal. And if you’re really in trouble, seek professional help from a debt counsellor – MoneySmart.gov.au is a good source of information.
