Regardless of Rate Cuts, Review Your Debts and Improve Your Cash-Flow

Regardless of what your net result is from the Reserve Bank’s latest official rate decision, if you feel over-extended financially, you should be reviewing all of your debt arrangements to improve your cash-flow and reduce your overall reliance on credit.

And this is a three step process which will allow you to take more control of your own situation, rather than relying on rate cuts to be the only solution.

The three steps include auditing all your debts, seeing how your current accounts can be re-arranged to lessen pressure on their household income and improving your cash-flow to allow you to better meet your obligations.

Because until you look at all forms of credit outside of your mortgage such as credit cards, personal loans and retail cards, you won’t be able to get a real grip on what you have to work with.

This will also help you to understand how simple changes can improve your overall cash-flow and in the long term, will allow you to continue to meet your obligations without simply relying on a rate cut.

A good starting point is to do the following:

1. Find out all the current interest rates on all your debts
2. Rank them in order of what you owe on each and what rate you are paying
3. Investigate if you can consolidate some of the higher interest debts into lower interest forms
4. Reduce credit limits on credit cards and refuse any future offers of credit.

Once this is carried out, you will be more in control to move forward with your credit situation and won’t need to hold your breath each month when the RBA hands down a decision.

To find out more about budgeting and your home loan options, call resi on 136 126.

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