I know, I bang on a lot about having no debt, but in reality if you're reading this, it's likely you have so much debt you're slowly going under. So today, I'll give you a money hack to manage your debt.
This is a series of Money Hacks to help to make extra money by creating habits in your life. Previously I'd touched on a few of these Money Hacks but wanted to go more in-depth and didn't want to produce a 10,000-word monster article for you to read.
This series will only be completed when I run out of ideas to share so make sure you bookmark this site.
Consolidate your debt
As I've previously mentioned the only good debt is the type that makes you money. You know taking out a loan to buy an investment property that will grow quicker than the super low interest rates we're enjoying right now. Or even taking on debt to service a successful business idea is good debt.
But for most of us, we have the debt that just costs us money. Credit cards are the usual suspect in many homes but bad debt could also be a private loan you established to buy a houseful of furniture or worse still a new car.
But if you own a house then there is still hope.
You see, the interest you pay on a home loan is usually considerably less as the bank essentially owns your home until you pay it off. Therefore, its a low risk loan and enjoys lower interest rates.
But did you know you can consolidate all your high interest debt into your housing loan when you refinance?
Of course, you'll still have the debt but will be paying it off much more quickly, than credit card debt which attracts around a 20% interest rate.
Sounds great doesn't it?
Well the only catch is you'll need to start becoming responsible for your spending. Because, freeing up your credit cards can sometimes mean you think you can spend more especially if you're a serial spender. Which is the worse thing you can do.
This money hack is really for the people that can see a new path and want to break free from the debt cycle forever.
And hey re-financing your loan is something you should do periodically anyway, as there are often more competitive loans on offer every day. The banks really want your business.
Just remember if you have other loans, try to consolidate into your housing loan when you do re-finance.
You'd be surprised to know most people don't know this money hack and just keep trying to meet their repayments each month.
And if you know someone with plenty of bad debt, then please share this tip with them because it might just help them to turn the corner and eventually free themselves from debt.
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