Debt Consolidation

Youth Allowance Calculator – Find Out What You Can Receive

NickDunin — Mon, 07 May 2012 01:01:04 +0000

We’ve created a tool to help analyse what exactly you can receive from Centrelink, without having to scroll through all the different tables on the Centrelink website. We have seen how frustrating and time consuming it is to work out the math on your allowance benefits depending on your salary, living arrangements and other factors.

Follow the steps and you should find out your allowance within a few mins

Love it? Embed it and share!
 <param name="wmode" value="transparent" /><param name="movie" value="http://www.debtconsolidation.com.au/media/calculators/ya.swf" /><param name="allowFullScreen" value="true" /><param name="allowscriptaccess" value="always" /></object> With compliments of <a href="http://www.debtconsolidation.com.au/" target="_blank">debtconsolidation.com.au</a>

How To Fly First Class Around The World on Frequent Flyers

NickDunin — Tue, 03 Apr 2012 08:50:05 +0000

What does being loyal to your credit card provider get you? Zilch. Nudda. Zip.

What does being disloyal get you? If you play your cards right, at least two first-class tickets around the world!!!

We’re about to show you how indulging in a spot of credit card hopscotch can see you notching up those frequent flyers faster than a red-eye flight to Melbourne.

No scams, no tricks, no buying a Porsche with the Amex…we’re talking an easy, straight forward strategy that virtually anyone can do.

How? Let’s start at the beginning…

WHAT ARE FREQUENT FLYERS?

Frequent Flyers (FF) is a Qantas rewards program where you accumulate points called Frequent Flyers. Points can be redeemed for flights, hotels, restaurants and more. You earn points by either flying with Qantas and their partner airlines, shopping at certain places or through the use of a linked credit card.

Now, seeing most of us don’t fly regularly, or like being told where to shop, the key to racking up the FF rests with something we pretty much all have and use – the credit card.

USING THE CREDIT CARD TO EARN POINTS

It’s pretty simple. Spend money, earn points.

Most ‘premium’ credit cards let you earn uncapped points equal to the amount that you spend ($1 = 1 point), while the more ‘basic’ credit cards give 1 point per $2 spent, plus it’s capped at 1000 points per month. This monthly limit doesn’t really affect you too much, as long as you can spread your bigger purchases out a little bit to reap the maximum reward. For example, if you’re looking to buy a $4000 bed, put down a $2000 deposit one month, and pay the outstanding balance the next.

Or, why not get an American Express card as well? Their points are uncapped, making it ideal for those bigger purchases, even cars!

THE BIG FISH – BONUS POINTS

OK, now you’re about to find out how to really send your FF points sky-rocketing.

They’re called Bonus Points, and could account for up to 70% of your FF total.

Think of Bonus Points as the bait that credit cards use to get you to sign up. Bonus Points can range from around 15,000 points up to as high as 75,000 points, and usually only require you to make a single purchase in order to redeem them, like using the card to pay for the groceries.

Now here’s when you can really play the field.

Why just sign up for one credit card, when you can have three or four, each with their own whopping amount of bonus points?

Keep each card for approximately 11 months and then close it, ensuring you don’t pay an annual fee for the start of the second year.

Once a card is closed, simply sign up to the latest FF credit card deal of the moment, reaping in thousands of bonus points again.

Unlike back in the early days of FF, the internet now lets you apply for credit cards online, making the application process much quicker and easier!

JUST HOW MANY POINTS ARE WE TALKING ABOUT?

By playing your cards right, you can earn hundreds upon thousands of points by doing little more than changing credit cards annually.

Troy*, 38, from Perth, WA, has been playing the FF game since 1994, and since then has clocked up over 1,000,000 FF points. These points have taken Troy around the world TWICE in first class, and he was also able to fly a relative over from Melbourne in business class.

That’s some seriously good rewards for not a whole lot of effort.

THINGS TO BE AWARE OF

Stay on top of annual fees – you often can’t avoid the upfront annual fee but make sure you cancel the card before 365 days to avoid paying it again.
Frequent Flyer points can’t be used to pay the taxes and charges on your airline ticket.
Keep a check of your credit rating. Apply for multiple credit cards too often and your credit rating can suffer.
Don’t get sucked into cashing in your FF points for shopping rewards. 420,000 points might get you approximately $4000 to spend at Myer, but it’s much better value cashing them in for a first class ticket around the world.
There is a joining fee to sign up to the FF program, but you can avoid this by finding a credit card that gives you the membership for free.
FF points can expire, but only if you don’t earn any additional points within a year, which is quite unlikely.

YOU’VE GOT TO HAVE A GOAL

Before you start piling up the points, take a moment to set yourself a goal, such as “I want to earn a first-class ticket to fly around the world.”

Having a goal can not only help you to see the big picture, but it will also subdue the temptation to cash-in points here and there for items such as electrical goods or short-haul, national flights. These smaller rewards will only set you back in achieving that big holiday of a lifetime (until the next holiday of a lifetime, of course).

That said, if your goal is to simply take one short flight per year, then you’re better off sticking to one simple card, like the Woolworths EveryDay Rewards card, where points are accumulated every time you do the grocery shopping.

WHERE TO GET STARTED

Citibank has recently come onto the scene with generous FF offers. We’re talking around 60,000 bonus points! Plus, if you’ve got an existing credit card debt and move it to Citibank, you get a 6 month low transfer rate of around 3%. And the best part? Citibank lets you earn UNCAPPED FF points!

You can amalgamate credit cards like the ANZ Frequent Flyer Visa and American Express into one statement. It’s as convenient as having just one credit card, while the American Express comes in handy for clocking up the points for those big purchases, like an $8000 fridge. While the ANZ FF VISA has capped points, the American Express doesn’t. It’s the best of both worlds! See CompareCreditCards.com.au for more info

The Qantas website shows you the latest FF credit card deals worth checking out – http://www.qantas.com.au/fflyer/dyn/memberSpecials/index

Please share any of your stories or wins you’ve had with travelling around the world on frequent flyers

Image Credit: Flickr & Flickr again

Using credit cards effectively

NickDunin — Tue, 31 Jan 2012 10:27:09 +0000

image credit

There are two very different camps when it comes to credit cards. There are those who believe they should be avoided at all costs, and there are others who believe that credit cards can be a great budgeting tool.

Both sides can be correct, but it all depends on the holder of the credit card and how they use it.

There is no doubt that credit cards get thousands of Australians into financial difficulty every year. For those of us without sufficient financial discipline, credit cards can quickly spiral out of control and leave us in a serious debt trap that may seem impossible to escape.

But when used properly, credit cards can not only be a convenient and useful budgeting tool, they can even help you to reduce your home loan.

Getting the basics right

Before you even think about using your credit card effectively you need to make sure you have the right card to suit your needs.

If you plan on repaying your card in full each month, then you’ll want a card with an interest free period. The longer the interest free period you can get the better, especially if you plan on using the card as part of your mortgage reduction strategy.

If you plan on carrying a balance on your card from one month to the next and not repaying it in full, then first of all you need to take a look at your overall financial situation and decide whether or not a credit card is even right for you.

If you fit within the latter category but still wish to use a credit card, then you can choose a card without an interest free period since you’ll always be charged interest anyway. Generally you can obtain a lower interest rate when selecting a credit card without an interest free period.

Pay off the balance

If possible, it is always best to repay the balance in full at the end of each monthly billing period.

For cards with an interest free period, you will be assured of never paying any interest provided that you clear the balance each month.

If you cannot repay the balance, then you should try to pay as much off the balance as you can in order to keep your interest charges to a minimum.

Remember, if you do not repay the full balance you will be charged interest. In some cases the interest will be backdated to the date of purchase, even if you have a card with interest free days.

Budgeting using credit cards

Because credit card statements contain detailed information about every transaction you make each month, they can be a great way of keeping track of your spending and assisting with budgeting.

At the end of each month you can sit down with your credit card statement to see where you money is being spent and identify any areas where you can cut back. This is not something you can do with cash unless you keep detailed manual records.

Low rate balance transfers

Banks and other financial institutions often offer credit cards with low rate or even zero rate balance transfers. If you carry a balance on your credit card from month to month, it may be worth considering a balance transfer in order to secure a lower rate.

Because you will be charged lower interest rate, more of each month’s payment will come off your balance rather than just covering the interest. This can allow you to repay your credit card debt sooner.

Most offers will be for a special rate over a limited time, for example 2.9% for six months. Others may offer a slightly higher interest rate but over a longer period, for example 3.9% over twelve months.

As for which is better, it depends on your own personal circumstances. If you think you can repay the full balance within six months, then the first option may be the best. But if you think it will take twelve months or longer to repay, the latter option may be better.

The reason the banks offer low rate balance transfers is to attract new credit card clients, but there are a few catches to watch out for.

Often once the balance transfer period ends, the rate will jump up to a much higher rate. If you have not repaid the balance in full by this time, you could find yourself paying more interest than you were on the original card you transferred from.

It is also important to be careful when making additional purchases using a balance transfer card, as any repayment you make will often come off the low rate portion rather than the latest purchase, meaning that your purchases could sit on your card for years at the higher rate of interest whilst you keep paying off the balance transfer portion at the lower rate.

Not all cards work in this way, but many do so it is important to check the fine print before taking out a balance transfer card and making additional purchases using the card.

Using credit cards to reduce your home loan

Credit cards with an interest free period can be used in conjunction with a mortgage offset account to help repay your home loan sooner.

This strategy requires you to put all of your income and wages into your mortgage offset account, whilst using your credit card to cover all expenses. At the end of each billing cycle the credit card balance must be paid in full using funds from the offset account.

The strategy works by maximising the balance in your offset account throughout the month, which reduces the interest you pay on the mortgage. No interest is payable on the credit card because the balance is cleared by the due date each month.

Credit cards – friend or foe?

Whether your credit card has a positive or a negative impact on your financial position really depends on how you use the card. Use the card effectively and it can definitely have a positive effect, but using your card in the wrong way can have a major and lasting negative impacts.

Using credit cards to pay off your mortgage sooner

NickDunin — Wed, 25 Jan 2012 10:25:28 +0000

image credit

For many people looking to repay their mortgage sooner, the idea of paying for everything on a credit card may sound like a strange one, but it can in fact help the process.

The theory behind this strategy is that you maximise the amount of money in your mortgage offset account by making all purchases on a credit card. To make the strategy work you will need to have the right type of products and the discipline to make it work.

What you’ll need

Your mortgage will need to have a 100% offset account attached. Most offset accounts do offer 100% offset now, but it’s worth checking first before you embark on this strategy. An account with anything less than 100% offset may not be sufficient to make the strategy work.

Your credit card will need to be one with interest free days. Commonly these types of cards have 55 days interest free, which is the period from the start of your billing cycle through to the due date. The strategy will not work at all unless your card has interest free days.

The final thing you will need is discipline! For the strategy to work you must repay your credit card balance in full by the due date each month. If you do not clear the full balance you will be charged interest on your card, which negates any benefit from the strategy and will actually put you in a worse position.

How it works

All home loans have their interest calculated daily, and if you have a 100% offset account, this will be taken into account when calculating your daily interest. If for example you had a mortgage balance of $200,000 and an offset account balance of $3,000, you would only be charged interest on $197,000 for that day.

Your daily interest rate is simply your annual rate divided by the number of days in the year. For example an annual rate of 8.00% would equate to a daily rate of 0.022% assuming a standard year of 365 days.

As we can see above, the more money you have in your offset account every day, the less you will be charged in interest.

To maximise the amount of money in your offset account at all times we take advantage of the interest free days on your credit card. Purchases made at the start of your billing cycle can sit on your credit card for up 55 days without being charged a cent of interest. That money can instead sit in your offset account before it is transferred to your credit card on the due date.

The strategy in action

Let’s say your monthly household expenses resulted in an average credit card balance of $3,000. The balance will be lower at the start of the month and higher at the end of the month, but for this example we will go with an average of $3,000 across the billing cycle.

At a daily interest rate of 0.022% as per the previous example, by having that $3,000 average sitting in your offset account you will be saving around $20 per month in interest.

$20 per month may sound like a drop in ocean compared with your loan balance, but thanks to the power of compounding interest this can add up to hundreds per year in saved interest, which can shave years off the life of your loan.

Using insurance to protect your debts

NickDunin — Wed, 18 Jan 2012 10:24:37 +0000

image credit

There are plenty of ways to fall behind with your debts, and they all end up with the same unwanted result – people chasing you for money.

Some things can’t be helped, like being laid off from work or having other large expenses pop up expectedly. But falling behind on your repayments due to injury illness is definitely one cause that we can protect against.

For many of us, especially if we are casual, contract or self-employed workers, if we cannot work due to injury or illness we won’t get paid. If we don’t get paid we can’t pay the bills, and things can quickly spiral out of control.

Thankfully there are a number of inexpensive insurance products that can help to protect us against these unforseen events.

Temporary illness or disability

One of the common reasons why people fall behind on their bills and debts is because of an absence from work. You only need to be away from work for a month or less before you can find yourself in financial trouble.

Income protection is a type of insurance that can replace up to 75% of your income if you are unable to work due to injury or illness, and the funds can be used not only to manage your bills and repayments, but can also help to keep a roof over your head and food on the table.

A basic income protection policy needn’t be expensive, and in most cases it will also provide you with a tax deduction.

Critical illness

Major illnesses can send people bankrupt and into financial ruin. There is a double whammy of not being able to work and earn money, combined with extra medical bills that you need to find money for.

Trauma insurance can protect you in this situation by paying you a lump sum if you suffer from a serious illness such as cancer, heart attack or stroke, along with dozens of other specified conditions.

The lump sum paid from a trauma insurance policy can be used to pay debts and other bills to ensure you can concentrate on your treatment and recovery instead of worrying about people chasing up outstanding debts and payments.

It’s not just parents suffering from critical illness that can cause financial hardship. One of the more serious and heartbreaking events that can cause financial (and of course emotional) stress is the critical illness of a child.

If you’ve ever had a critically ill child you will know that every cent is prioritised towards the child’s care. Getting a child back to full health is the priority for all parents, but sometimes this can be at the expense of paying debts and bills that can pile up.

Thankfully some trauma insurance policies include free coverage for your children, which means you can protect your family financially from the effects of a critically ill child. This will allow you to concentrate on your child’s recovery instead of worrying about money.

Permanent disability

Some illnesses and injuries can have the unfortunate effect of leaving you totally and permanently disabled. In this case you may be eligible for a Centrelink disability pension, but would this be enough to continue paying all of your bills and maintaining your debts?

There is a type of insurance designed specifically for this, and it is called total and permanent disability insurance (TPD)

TPD insurance will pay you a lump sum if you become totally and permanently disabled, and a medical professional believes that you will be unlikely ever to return to work.

In some cases you may still be eligible for a Centrelink pension, but the funds from your TPD insurance will enable you to immediately repay all of your debts and give yourself a healthy cash buffer.

Life insurance

Whilst illness and injury can have a profound impact on a family’s financial situation and their ability to pay their debts, the death of a family member can be the most financially devastating loss of all.

Life insurance is the most effective way to protect against the financial hardship that often results from the loss of the main income earner.

The funds from a life insurance policy can be used to repay all debts and mortgages, as well as covering expensive funeral costs. The policy can also provide a strong cash buffer for the difficult times ahead.

But isn’t insurance expensive?

Premiums for life insurance and associated covers such as income protection can vary greatly depending on your needs.

A comprehensive package can prove expensive for some families, however a basic package can be had for a small monthly outlay, and in the event of something going wrong it can mean the difference between easily covering your debts and bills, or having the debt collector knocking at your door.

Using superannuation to pay for your insurance

If you don’t have sufficient cash flow to pay for insurance, it doesn’t mean you have to do without the cover.

Some covers including life insurance, TPD insurance and income protection can be paid for using the funds from your superannuation.

There are a few restrictions when structuring your insurance in this way, but for a standard insurance package you may find that holding the cover in your super is a great way to protect yourself and your family financially without affecting your cash flow.

Managing your debts using insurance

There is no doubt that the right insurance can help you to manage your debts and other financial responsibilities in a stressful time of illness or injury.

Insurance cannot save you from serious injuries or illness, but it can certainly help to save you from the financial consequences of these events.

What to look out for when consolidating debts

NickDunin — Wed, 11 Jan 2012 10:22:45 +0000

image credit

Consolidating your debts can be a great way to reduce debt and improve your overall financial health, but there are a few things to look out for when considering a debt consolidation.

A debt consolidation involves rolling some or all of your debts into one single debt. The aim of the consolidation is to lower your overall interest rate and reduce your total fees.

Generally speaking, debt consolidation can definitely improve your financial situation, be here are a couple things you need to look out for to ensure your consolidation is a success:

Watch out for break costs and establishment fees

Depending on the type of debts you are paying out, there may be break costs charged if you are paying out the facility early. This isn’t an issue with credit cards, but with some personal loans and other forms of finance they may hit you with early repayment or break fees.

When taking out your new loan you will also likely be charged an application fee or establishment fee. The fee can vary from one lender to the next, so it is worth taking this into account when searching for your consolidation loan.

Now here’s the important part – you need to ensure that the savings you will make by consolidating your debts will outweigh the costs of putting the consolidation in place.

If the total costs are going to be $2,000 and your interest saving will be $20 per month, then it’s going to take you 100 months to recoup that money, which is over eight years. In this case it could be argued that you’re better off using the $2,000 to reduce the debt rather than consolidating.

Don’t get locked into bad loan

When consolidating your debts your overall aim should be to get out of debt completely. It may take many years, but with planning and discipline you can get there.

Your new loan must be flexible enough to allow you to make additional repayments as well as more frequent payments. If the loan locks you into a certain repayment rate and you cannot pay it off sooner, you may be doing yourself more harm than good.

Look at the interest amount, not the repayment amount

Often when consolidating debts you will be rolling a number of shorter term debts into a single longer term debt.

For example you may have a personal loan with two years remaining, a car loan with three years remaining plus two credit cards. The debt consolidation loan may have a term of seven years.

At first glance it may appear that your monthly repayments have reduced by a large amount, but this will likely have less to do with lower interest rates, and more to do with the simple fact that you are now spreading your debt over a longer period of time.

When doing the sums on whether or not a debt consolidation is right for you, ensure you are comparing the monthly interest payable on your debts rather than the overall monthly repayment.

Don’t extend your loan term and pay the minimum payment

As detailed in the previous point, often when consolidating debts you will be rolling short term debts into a longer term debt. This is especially true when you are consolidating your debts into a home loan which can run for up to thirty years.

When you roll short term debts into a longer term debt, naturally the repayment amount will reduce because you have longer to repay the balance. By paying the new minimum monthly payment you may think you are saving money, but instead you will simply be paying interest over a much longer period.

There’s no point halving your interest rate if you’re going to repay it over a two or three times longer period.

Cancel your old credit cards

One of the biggest mistakes that people make when consolidating debts is the failure to cancel their old credit cards and store cards.

You may have the best intentions when you first pay out the card, but unless you cancel the card there will always be the temptation to use the card again now that the full balance is available.

When consolidating your debts, it is vital that you cancel the original debt. This includes credit cards, store cards, lines of credit and any other form of revolving credit.

If you require a credit card for convenience and online shopping, keep just one card and reduce the balance to a manageable amount like $500 that won’t allow you to get into too much trouble. Alternatively you can get a Visa debit card and escape the credit card trap forever.

Consolidate for the right reasons

When consolidating your debts you need to be doing it for the right reasons.

By committing to the consolidation process and concentrating on reducing the new debt you can make a dramatic improvement to your overall financial health.

Top five tips to repay your loans earlier

NickDunin — Mon, 09 Jan 2012 10:20:11 +0000

Image Credit

Many people feel trapped by their debts, however there are a number of ways you can repay your loans sooner and escape the debt trap.

1. Don’t just pay the minimum repayment

This is one of the first traps that people fall into. By paying the minimum repayment you will only be reducing your debt by a very small amount each month, as the majority of your minimum repayment will be eaten up by interest charges.

But for every dollar over the minimum repayment that you pay, the full amount will come straight off your loan balance, and thanks to the power of compounding interest this can have a major impact on your debt over a period of time.

Try to round your repayments up to the nearest $100, or if you cannot afford that at least try to round up to the nearest $10. This may not seem like much, but over time it will certainly help to repay your loans earlier.

If you are planning on making extra repayments, you should prioritise these amounts using the next tip…

2. Repay higher interest debts first

If you have multiple debts to repay, you need to repay the debts with the highest interest rates first. This will reduce your interest bill over time, allowing you to get out of debt more quickly.

You should make the minimum repayment on each debt except for the one with the highest interest. With this debt you need to pay as much as you can afford so that you can pay it off before the others. Once it has been repaid in full, then use the same strategy on your next highest interest debt.

3. Debt consolidation

One of the most popular ways for people to reduce their debt is to use a debt consolidation loan.

A debt consolidation works by rolling multiple debts into a single debt, with the new loan having an overall lower interest rate than the debts that are being consolidated.

The benefits of a debt consolidation can be numerous. Firstly it will reduce your monthly interest bill, which will allow you to reduce your balances sooner. It will also reduce your fees if you are paying monthly fees on multiple accounts, and it will allow you to focus on a single repayment each month.

4. Make your repayments fortnightly

Switching to fortnightly repayments is an easy way to help repay your loans sooner.

Simply halve you normal monthly repayment and pay that amount fortnightly. Because there are 26 fortnights in a year, you will effectively be making 13 full repayments each year. You are only required to make 12 monthly repayments, so this strategy will result in you making one extra repayment each year.

By making one extra repayment each year you will save time as well as interest on your loans, helping you to pay them out sooner.

5. Budget

This is perhaps the best tip for helping you to repay your loans sooner, as well as helping you from getting into more debt down the track.

By creating and sticking to a budget you may be able to identify areas where you can save money each month, and those savings can then be directed towards repaying your loans sooner.

Repaying your loans earlier

To give yourself the best chance of repaying your loans earlier you need to use a combination of strategies.

Most of the strategies detailed above will be more powerful when combined. For example if you were to consolidate your debts into a single loan with a lower interest rate, create and stick to a budget, then put all of your surplus funds towards the debt (paying fortnightly of course) you will be well on the way to becoming debt free.

The Melbourne Cup – The Race That Could Save A Nation

NickDunin — Thu, 27 Oct 2011 01:25:01 +0000

This infographic demonstrates the impact that we Australians could have on the world community if we took the money that we wager on The Melbourne Cup and directed it to charitable organisations.

The Melbourne Cup - The Race That Could Save A Nation

Like it? Add this graphic to your blog, or share it with your friends!

650 PIXELS WIDE VERSION
<a href="http://www.debtconsolidation.com.au/the-melbourne-cup-the-race-that-could-save-a-nation"></a> Source: <a href="http://www.debtconsolidation.com.au">DebtConsolidation.com.au</a>

500 PIXELS WIDE VERSION
<a href="http://www.debtconsolidation.com.au/the-melbourne-cup-the-race-that-could-save-a-nation"></a> Source: <a href="http://www.debtconsolidation.com.au">DebtConsolidation.com.au</a>

What Everybody Ought to Know About Australia’s Credit Card Debt

NickDunin — Tue, 05 Apr 2011 14:03:03 +0000

What Everybody Ought to Know About Australia’s Credit Card Debt

Like it? Add this graphic to your blog, or share it with your friends!

800 PIXELS WIDE VERSION
 <a href="http://www.debtconsolidation.com.au/what-everybody-ought-to-know-about-australias-credit-card-debt"></a> Source: <a href="http://www.debtconsolidation.com.au/information/debt-consolidation">DebtConsolidation.com.au</a> 

650 PIXELS WIDE VERSION
 <a href="http://www.debtconsolidation.com.au/what-everybody-ought-to-know-about-australias-credit-card-debt"></a> Source: <a href="http://www.debtconsolidation.com.au/information/debt-consolidation">DebtConsolidation.com.au</a>