Financial burdens can place a tremendous amount of pressure on you. If you\u2019re struggling with paying off large amounts of debt, you\u2019re not alone. The average debt in New Zealand is\u00a0$79,000 per person<\/a>.<\/p>\n
The scariest part about the money owed is the debt to asset ratio. Most New Zealanders make considerably less money than they owe. In fact, the typical\u00a0annual income in New Zealand<\/a>\u00a0rests right around $57,000, after taxes.<\/p>\n
Let\u2019s start by looking at how institutions calculate your credit score. When you have a better idea of what financial institutions are looking at, you\u2019ll understand how to create an effective plan of action.<\/p>\n
First, you\u2019ll want to know how to think about the debt you currently have. Do you consider one debt to be more important than another? Perhaps, you have a loan with a higher than usual interest rate.<\/p>\n
It might be tempting to tackle the expensive interest loan first, in an attempt to set yourself up for success. The\u00a0average household debt<\/a>\u00a0in New Zealand consists of a variety of debts such as mortgage loans, consumer loans, student loans, and credit cards.<\/p>\n
Your credit doesn\u2019t take into account what debt is costing you the most. Instead, they are only going to look at the bigger picture, your total debt accumulated.<\/p>\n
Specifically, credit scores calculate two different kinds of debt. Here are the 2 kinds of debt credit scores take into account.<\/p>\n
The instalment debt refers to things like mortgages, or short term loans. Typically instalment debt is seen as more expensive because it involves a large sum of money.<\/p>\n
Yet, the first thing financial institutions are going to look at is your revolving debt. Revolving debt involves things like credit cards. The word revolving comes into play because as you spend, the credit limit fluctuates.<\/p>\n
Your monthly balance changes from one month to the next. Instalment debt is different because the credit limit doesn\u2019t fluctuate. Instead, the individual is paying regular amounts, or instalments, towards a loan.<\/p>\n
Consolidating the cards can help bring down the monthly interest payments. Here are a few couple ways you can look into combing the credit card debt.<\/p>\n
Make sure the loan you\u2019re getting has lower interest rates than your current credit card debt does. If the loan’s interest rates are lower, you can use it to pay off all of your credit card debt. Then you can focus on just repaying the loan.<\/p>\n
Personal loans have lower interest rates, with more forgiving repayment grace periods. Another option you have is to get a balance transfer card. This card will be a new account you open, and transfer other lines of credit debt to.<\/p>\n
Find a company that will allow you to transfer all or most of the debt. You\u2019ll also want to make sure the card has no annual fees and has a low-interest rate. The interest on your credit card debt is an \u201cannual percentage rate<\/a>\u201d, or APR.<\/p>\n
Are you going through a temporary hardship, like loss of employment? If a recent major life change is making it hard to pay off debt, you might be able to work out a deal. Speak to your creditors and explain your temporary situation.<\/p>\n
There\u2019s a high probability they\u2019ll be willing to work with you. Remember, their goal is to recover as much of the money they\u2019re owed as possible. By being in communication with them, they might be able to offer you a temporary grace period for bills due.<\/p>\n
If creditors aren\u2019t able to make a deal with you, then you could still seek out a\u00a0quick cash loan<\/a>. Getting the loan, and paying off the upcoming bills, could keep your credit score from dropping.<\/p>\n
Now you know more about how to keep good credit. As you move forward, remember to focus on your savings as well.<\/p>\n
It\u2019s easy to get caught up in repaying past debts and forget to save for future emergencies. Being unprepared for the next big life surprise could place you in more debt. Make sure you create an emergency kitty, for whenever you need a quick financial surplus of cash.<\/p>\n
Keep the emergency funds in a financial institution, away from the house. This way it\u2019ll be a lot less tempting for you to use it for other expenses.<\/p>\n
At Loans24, we care about helping New Zealanders find reputable lenders. We understand that in life, unexpected financial obligations are going to happen.<\/p>\n
If your credit is less than wonderful, it can be hard to find a personal loan. Yet, that doesn\u2019t have to mean it\u2019s hopeless. Check out our article about how people with poor credit can still\u00a0borrow money<\/a>.<\/p>\n\n