Becoming submerged in debt these days isn't all too hard - we're all citizens of a credit economy that screams "buy now pay later", and it's easy to lose track of how much you're actually spending. With countless credit finance options being presented to Australians in the form of student loans, home financing, car loans and credit cards, it's very easy to find yourself headed towards financial turmoil if you aren't great at managing your spending. The first step is to detect the early warning signs that you're approaching financial trouble. In this blog post, we will help you figure out how to deal with debts.

Key Early Indicators of Debt Include:

• Your earnings are much less than your expenses. You're not saving and paying out large sums to finance loans and other debts.
• Your emergency fund is non-existent - you're living from paycheck to paycheck.
• You are only paying the minimum on your loan repayments, with the principal amount being untouched.
• Late loan repayments are beginning to affect your credit rating. This, in turn, makes it difficult for banks to trust your credibility and give you alternative financing options.
• A deduction of your total liabilities leaves your net worth at $0, or even in negative numbers.
• Small indulgences such as a night out or a great meal at a rated restaurant are becoming luxuries.

Getting yourself in debt is not a great situation to be in. But before you begin to feel hopeless, remember it's not the end of the world. With a stringent plan and matching discipline, you can help your finances to get healthier in no time at all.

How do you get out of debt?

With the right attitude, willpower, and an effective plan, you'll find yourself slowly emerging out of debt. The first step is to sit down and figure out exactly how much your current net worth is and how much your total liabilities are. From there, create a realistic plan that factors in your weekly, fortnightly, or monthly income. Come up with a realistic weekly budget that considers all daily and major expenses. Remember to separate expenses that are avoidable from the activities and expenses that are unavoidable. For example, rent would be an unavoidable cost, while your morning coffee at the local café is definitely avoidable. Your budget will function as your financial roadmap, showing you where your money is going and where you can make savings based on your current spending patterns.

Examples of How You Can Cut Back on Unnecessary Spending Include:

• Cooking your own food rather than spending money eating out at restaurants and cafes.
• Put a hold on or cancel any magazine subscriptions you don't need. Yes, you might at first consider them as essential, but carefully reassess the situation and make the right decision.
• The same goes for gym memberships. If you're not effectively using it, cancel it. You can work out at home. There are numerous informative workout tips and videos online.
• Buy essential food items (e.g. rice, oats, pasta, lentils) in bulk. Bulk buying usually works out to be cheaper. And see if you can cut down on expensive and unnecessary grocery items. Switch to vegetarian meals for a while, buy generic and shop at your local fruit store. These minor changes can seriously add up!
• If you must go on vacation, choose to travel within the country. Australia is large, beautiful and diverse - there's plenty to see and do here. And that's not to mention, we have some of the best free attractions in the world. From beaches to art galleries, to great hikes to museums – there really is something fun for everyone to do. And for the ultimate budget escape, go camping at a national park!
• Switch off lights in rooms you're not occupying. Similarly, keep a close eye on other utilities such as gas and water.
• Save on fuel expenditure by opting for public transport. Another option is carpooling. Better yet – start driving for Uber on your commute to work. 
• Try to withdraw a set amount in cash for the week to minimize spending. This method works well on several levels. Firstly, you have a physically quantifiable amount of money right in front of you. This means you can directly see how much money is diminishing from your wallet or purse as you spend, making you constantly aware of your habits. You also avoid incurring any ATM withdrawal charges and surcharges associated with card payments. If this is not an option for you, you can apply this method by opening multiple savings accounts instead. 

Adopting these habits and letting them become second nature will eventually help you reach your debt-free goal faster. Other proven methods to assist you with freeing yourself from debt include the Snowball and Avalanche methods.

The Snowball Method

The Snowball method involves paying off your smallest debts first because starting with the smallest debt will be much easier to achieve in comparison to the largest debt amount. By paying it off quickly, you will also become more psychologically motivated to take on your larger debts.

The Avalanche Method

The Avalanche method encourages you to first pay off the amount that is larger. In the long term, this is the amount that will accrue a higher rate of interest and cost you more, so it does end up being less expensive in the long run. 

Learn A New Skill or Find an Extra Job

Given that your problem involves not having enough money, it makes sense that getting a second job or utilizing new skills could help to remedy this issue. Some ideas include:

• Getting a second job, such as casual weekend work.
• Earning extra money at home by freelancing your services on sites like Upwork and Freelancer, or by running a home business.
• Find out if you're eligible for a promotion at work, as this may incidentally increase your income.
• Learning new skills doesn’t have to involve expensive fees. There are many free resources online through websites like Code Academy, Udacity and Udemy, where you can learn a new skills set for free, or very cheaply. Furthering your qualifications can allow you to find an extra job that might be better paying.

Debt Solutions

Debt advisory services such as Credit Counsellors specialize in debt control solutions, including Informal Agreement, Bankruptcy, Personal Insolvency Agreements and Debt Agreements, and can give you great advice on how you can eradicate your debts. Each solution is tailored to the debtor's individual circumstances to ensure they receive personalized and relevant advice so you can once again start living life to the fullest.