February 2003 Volume 84 Number 1 "serving the protectors"

In some cases, debt can lead to despair. With credit cards full and personal loans on top of living expenses, debt can put pressure on relationships and your sense of wellbeing. But there are steps you can take to make sure debt doesn’t control your life.

There are several ways to roll your debts into a more manageable form. You can take out a personal loan or a special debt consolidation loan and may even be able to access the equity in your home by adding the debt to your mortgage. Police Credit Union can provide more details about the product that will best suit you.

Consolidating debts works if the new loan makes your monthly repayments and interest rate lower than your existing debt. A lower interest rate can save you thousands of dollars over several years. A single loan may also help you to be disciplined about making regular, affordable repayments.

However, debt consolidation doesn’t work for everyone. Calculate the interest you’re paying now and compare that with the interest you’ll be charged on a new loan. Don’t forget to find out the upfront costs of establishing a new loan. Be certain that the repayments are manageable and be prepared to cut up your credit cards.

Approach your credit union with all the information they will need to make a decision about providing you with a loan. You’ll be asked for a list of everything you owe as well as the value of your assets – such as your house and car. You’ll also need proof of your income.

If you’ve worked out your budget already and have found ways to cut your expenses, then you can estimate the maximum amount you can afford to repay. The idea is to repay as much as possible to reduce the debt quickly, without leaving yourself poor and miserable – and tempted to go on a shopping spree as a pick-me-up – in the meantime.

Five steps to get out of debt

• Account for every cent you spend. This includes not only regular bills, but also any small purchases. Some people find it helpful to keep a journal for a week or a month noting all purchases, from a carton of milk to a weekly video rental.
• Review your spending to find ways to cut expenses. When you can see your spending habits on a sheet of paper, it’s often easier to make decisions about items that you can live without. If you find you are spending $60 a week on buying lunches at work you may decide to bring lunch instead and reduce your debt by that amount. Police Credit Union has a budget planner available on its website (policecu.com.au) which will make the job of recording this information much easier.
• Draw up a budget that allocates the maximum possible repayments to your debt. It’s vital that your budget be realistic and reasonable. Don’t forget to put some funds aside for emergencies and entertainment.
• Cut up your credit cards. This can be a big step for many people but you can continue to have access to phone and online payments by applying for a VISA debit card from your credit union. That way you spend your own cash and can’t get into debt.
• Approach Police Credit Union about ways to consolidate your debts.

Take the next step

Phone Police Credit Union today on 131 844 for information and advice on how we can help you consolidate your debts.

PASAweb   Index & Search   Top of Page   Comments   Email to Editor

The Police Journal Online is an official publication of the Police Association of South Australia and is published monthly. Editors of kindred publications can seek permission from the Editor to re-publish any Police Journal Online article. Copyright 2001  The Police Association of South Australia sustance