All replies If you are going to pay, you need to pay soon. Indexation is calculated and applied to you help debt on 1 June so if you pay it off before then, you avoid the indexation for the year. You won't get a better tax outcome since HELP/HECS debt is after tax money BUT paying it off may affect your return.
It's almost all interest rate dependent. If your debt is less than you can make in a savings account (somewhere 5 or below) then the easy answer is to save. If the debt is a higher rate, the answer is to pay off the debt.
Wiping out high-interest debt on a timely basis will reduce the amount of total interest you'll end up paying, and it'll free up money in your budget for other purposes. However, while it's important to focus on paying down debt, it can be equally important to devote money to emergency savings.
A loan may offer lower interest rates than your current debt and a reduced chance of missing a payment. It may even help improve your credit scores in the long run. That said, a loan may also come with a higher monthly payment, additional fees, and the possibility of going deeper into debt.
Paying off your debt as fast as possible may seem like the responsible thing to do, but not having an adequate emergency fund or saving for your future could leave your finances at a permanent disadvantage down the road.
Paying off debt can feel like it has to be your only financial priority. But you should do some saving while you're paying down debt. Even a small cushion of emergency savings can keep you from going deeper into debt when an unexpected expense pops up.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Over time, paying down debt has the potential to significantly improve your health and overall quality of life. No matter how small, any step toward becoming debt-free is a positive move in the right direction.
While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.
Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit score may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.
They stay away from debt.
Car payments, student loans, same-as-cash financing plans—these just aren't part of their vocabulary. That's why they win with money. They don't owe anything to the bank, so every dollar they earn stays with them to spend, save and give! Debt is the biggest obstacle to building wealth.
Most consumer debts will “expire” after three to six years, meaning a creditor or debt collector can no longer sue you for them. You're still responsible for paying old debts, but waiting until the statute of limitations runs out might help you avoid future legal issues.
Emotional relief.
You may feel liberated and relieved to no longer have the stress of paying off debts. You've now broken free from difficult times in the past, and you're able to move forward with better habits and financial freedom.
The indexation rate applied on 1 June 2023 of 7.1% has been reduced to 3.2% and the indexation rate applied on 1 June 2024 of 4.7% has been reduced to 4%. Was this page helpful?
The 15/3 rule, a trending credit card repayment method, suggests paying your credit card bill in two payments—both 15 days and 3 days before your payment due date. Proponents say it helps raise credit scores more quickly, but there's no real proof. Building credit takes time and effort.
Being debt-free is a financial milestone we often hear about people striving for. Without debt, you can focus on building more savings, investing those extra funds and just simply having more peace of mind about your finances.
High-interest loans -- which could include payday loans or unsecured personal loans -- can be considered bad debt, as the high interest payments can be difficult for the borrower to pay back, often putting them in a worse financial situation.
While this figure can vary based on factors such as location, family size, and lifestyle preferences, a common range for a good monthly salary is between $6,000 and $8,333 for individuals.
Quick Take: The 75/15/10 Budgeting Rule
The 75/15/10 rule is a simple way to budget and allocate your paycheck. This is when you divert 75% of your income to needs such as everyday expenses, 15% to long-term investing and 10% for short-term savings. It's all about creating a balanced and practical plan for your money.
35% or less: Looking Good - Relative to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you've paid your bills. Lenders generally view a lower DTI as favorable.
Generally speaking, however, even during recessions it remains important to prioritize debts with higher interest rates, like credit cards or store cards, while continuing to save for retirement, emergencies, and other needs.
“Cash upfront” is a tried-and-true bargaining tool with a long history. Although savings account interest rates are not particularly attractive at this time, any interest coming in is better than interest going out, making saving at least modestly preferable to going into debt.