It is surprising to know that Australia has the fifth highest household debt in the entire world – and that says a lot, considering there are 195 countries. Australian households have an average debt of $86,000. In 2019, a study revealed that three in four households are in debt: that’s roughly 75%.

It can be quite mind boggling to know that such figures exist and that they are in fact very real. Debt is a concept that is not new to us. The moment our first credit card was approved, we had the freedom to use it on items we thought we needed – racking up bills in return. We are not only collecting debt via credit card but also through loans and mortgages.

If you want to get yourself out of debt, we’ve listed down six reasons why doing it now is better than waiting it out.

I want to spend more money on things I enjoy

This might sound silly but you pay off debt so you can use your hard-earned money on things and experiences you truly enjoy.

The thought of splurging on yourself or your family freely is truly underrated – with your debts fully paid, you’ll be kissing that feeling of guilt whenever you buy something bye bye!

I want to have a better credit score

Don’t underestimate debt. Small or big, it will affect your credit score if you don’t deal with it now. Paying your bills might seem like a trivial thing and you might also tell yourself that missing one or two payments is all right. The thing about your credit score is that it is quite accessible now. When you decide to buy a new vehicle or you are applying for a mortgage, financial institutions have access to your credit score and debt can definitely negatively impact it.

Being debt-free (or at least paying your bills on time) is a surefire way to keep that credit score going strong.

Financial security is my priority

Debt can turn your finances upside down and financial security is one goal you should be aiming for while you’re still young. You cannot be financially stable if a huge chunk of your income goes to paying off debt. Paying it off as soon as you can can make a world of a difference.

I don’t want to feel stressed out anymore

Debt can cause unnecessary stress and anxiety in a lot of people. Aside from debt, many of us struggle with other financial issues such as living expenses.

How can I pay rent if I have debt to pay?

Can I afford to buy groceries this week?

Will my electricity and water be cut off?

How can I save money if I have debt?

These are very real anxiety-inducing thoughts that adults face. Sometimes, the mental burden is overwhelming. Avoid being in this situation and prioritise paying off debt as soon as possible. A financial advisor with years of experience in handling finances can help you get your life back on track.

I want to have control over my finances – and not let it control me

How many times have you found yourself in situations where “if only I didn’t have debt….” was the first thought that came to mind?

While we certainly have no control over all the things that will happen to us, what we CAN control more is our financial status. In case an emergency arises, or you are faced with a golden opportunity that requires spending, you have the leeway to confidently deal with them head on.

I don’t want to spend on interest charges

The reason why people can struggle to pay off their debt is because of the interest charges. You are paying for the convenience of being able to borrow money from a bank at any given time. Interest charges vary from one bank to another and depend on what you used the money for too. The interest rate of a car loan is different from a mortgage.

Be wise and pay off debt ASAP.

How to avoid debt

You can save yourself the stress and hassle by simply trying to avoid debt in the first place.

Debt isn’t a bad thing; in fact, unless you’re one of the richest people in the world, you’re bound to have debt every now and then (especially on things like a new car). It is our attitude towards it that makes it hard to live with.

Try living a life that is relatively debt-free with these tips from JMA Credit Control:

• Leave your credit card at home – or better yet, ditch it. If you’re feeling confident about your self-control and resolve to get your finances in order, call your bank and have your credit line cut. This way you are forced to pay in cash or debit.
• Live within your means and stick to it. Easier said than done but with a few lifestyle changes, you can do it!
• If you can’t buy it in cash, don’t get it. Such a simple mindset can influence the way you spend positively.
• If you must take out a loan, make it a habit to shop around and go for a financial institution that offers the best interest rates. Make sure you can stick to the payment schedule to avoid unnecessary debt in the future.
• Get in touch with a financial adviser that you can trust. If you struggle with managing your finances, don’t be ashamed to ask for help. There are professionals who have the expertise and know-how to get your money matters in the right place.
• Don’t be afraid to do some side hustle every now and then. That extra source of income can go towards paying off current debt or towards your savings.
• Don’t let money be the centre of your life. The world we live in today makes it easy for us to prioritise money over other things that do matter in this world – such as our health, our relationships with family and friends, and our personal happiness. While money DOES matter, try to live a life that has a healthy balance of grit, productivity, and leisure.

What if someone owes you money?

Being in debt is one thing but being owed money by someone else is another. How do you recover unpaid debts? Well, if you have a small to medium sized business in Australia, that’s something we can certainly help you with.

We help businesses all over Australia to recover debts from delinquent clients. We help businesses in all kinds of industries. Our debt collection agency has a strong reputation as being fair and effective – we work with your debtors to find the best solution for you – our client.

We also offer a variety of credit management services and advice, so talk to the debt collection team with more than 50 years of experience.