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Tips to help free yourself from the grips of debt.
Tips to help free yourself from the grips of debt. Jacob Ammentorp Lund

How to detox from debt and get your finances fighting fit

AS OF NOW, Australians owe about $50 billion on credit cards and almost $2 trillion of debts overall. As we edge closer to the new financial year, it's time to start thinking about how you can get ahead. 

The first step is to define your goals. Is it being debt free? Or perhaps saving for a holiday? Be realistic. Going debt free is hard if you have a mortgage, for example. Set a goal that you can achieve in steps, such as eliminating a $2000 debt from one credit card.

It's easier than you think, as the experts from Savvy Finance reveal below.

Trim off your debt

Going on a hard debt detox is like cutting the weight in the gym. Debts are the number one impediment to getting ahead on your finances.

One way is to consolidate your debts using a personal loan; however this still attracts some interest.

If you can find a credit card with a zero per cent balance transfer offer, you can enjoy 12 to sometimes 24 months of "catching up" on your debt without incurring extra interest.

"A balance transfer card is a great way to cut out your credit card debt without getting slugged 20, 25 per cent, per annum, in interest," says credit card expert and Savvy CEO Bill Tsouvalas.

"This can make a big improvement to your finances, especially if you pay installments above the minimum each month."

Using the MoneySmart calculator, paying off a $3000 debt with the minimum repayment would take 34 years and almost $10,000 in interest. Increasing the repayments to $150 a month slashes this to just two years!

Get a better mortgage deal

Mortgage rates have been on hold at 1.5 per cent since August 2016. Despite a housing correction, increased costs of overseas borrowing, and a Royal Commission cracking down on lending practices, mortgage owners can still refinance and come out ahead.

Shop around and do the sums or use a mortgage broker - who is a pro at finding the best deals and can figure out if you can really save on repayments.

Find your lost super

Remember the job you had in high school? Then the one at uni or when you did your apprenticeship? They all paid super, usually into default accounts.

Therefore, many of us have "lost" or unconsolidated superannuation. If you have many different super accounts, some of which may be doing nothing, find out where they are and consolidate them to avoid paying high fees.

You can also shop around for super providers; lower fees and high returns are the aim of the game.

Review your insurance and spending

As we're coming up to the end of financial year and start of a new one, it's best to review your insurance policies and figure out if your coverage is up to date.

You should also find out if you can get the same value policy for a lower price. Some companies grant discounts for holding multiple policies.

You should also go through your statements and cut off subscriptions or recurring payments to unused services. If you haven't gone to the gym in months, cut it off; It'll save you money!

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