How to manage your debt

How to manage your debt

Radio: There can be tax benefits from certain “good debts”.

Louis: Good debts? Hang on. Isn't all debt bad?

Jade: Actually, there is such a thing as good debt.

Louis: Jade! Weren’t you just on the radio?

Jade: Yes, I was. But now I'm here to help you understand the truth about debt, when it's bad, when it's good. How to manage it so it works for you.

Louis Voiceover: ANZ Presents: How To Manage Your Debt. It's okay. I didn't know either.

Jade: But first things first, you have to get your affairs in order. It's a whole lot easier when your accounts are all tidy.

Louis: So you're saying once I've sorted out my chaotic energy, it'll be easier for me to manage my debt?

Jade: Yes. If you can see exactly what you owe and how much income you've got coming in you can prioritise which debts you need to pay off first and you can make sure you're not adding to your debt or missing repayments. It's all about staying in control of your finances.

Louis: What's all this stuff that I hear about good debt? What's that even mean?

Jade: Well, good debt is when the benefits of the loan outweigh the debt. For example, a student loan might help you earn money later in your career. Or you know, a mortgage is technically a debt, but you could potentially earn a profit from selling your house if you eventually do. Also, if you're using your credit card wisely, that can be a clever use of debt too.

Louis: I'm struggling a bit. What do you mean?

Jade: Well, depending on the credit card, you could benefit from things like reward points or complimentary travel insurance. I bought an air fryer with my reward points last year.

Louis: Oh, my god. I'm jealous, did you?

Jade: Yes, I did.

Louis: Okay, tell me on three, what's your favourite thing that you made with an air fryer?

Jade: Chicken nuggets.

Louis: Beat me to it.

Jade: But yeah look you've got to use your credit card responsibly and not spend money you don't have. That's not a good use of debt.

Louis: So don't use your credit card like it's some magical ATM.

Jade: Yes, absolutely. Don't do that.

Louis: Where have you been my past 26 years on this planet Earth? I've needed you.

Jade: Ultimately, debt is just another tool for you to use. So you have to understand how it works and how you can use it efficiently to achieve your financial goals.

Louis: But what if you have different kinds of debt and you're struggling to know where to start?

Jade: Well, it's helpful to prioritise the soonest repayment dates, as these are the ones that are going to build up interest the longer you wait. You can also look into consolidating your debt, which is when you apply for a personal loan to pay off all your little ones, and then you can work on chipping away at one bigger loan over time. This makes it easier to manage, and sometimes you can even negotiate a lower interest rate overall.

Louis: Jade, I'm here with you and I'm so thankful. Do you like what I've done with the place?

Jade: Very neat.

Louis: Yeah. How nice is it?

Where can people go though to learn more about how to manage debt?

Jade: I'd highly recommend doing some research online, otherwise talk to your bank if you're struggling. Remember, they don't want you to do anything you can't afford. So they'll assess what works for you and help make a plan to keep up with your repayments.

Louis: Come on Jade, let's take a seat. It’s what we deserve. I'm proud of us.

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Jade: I don't think that's a real light. It's not working.