What is consumer debt and how can it be managed?
Consumer debt refers to the outstanding balances accumulated using credit cards, car loans, personal loans and buy now pay later (BNPL) facilities.
High-interest rates and poor debt management can lead to difficulties making regular payments, and result in financial distress,
Effective debt management strategies, such as debt consolidation or restructuring and budgeting, can help individuals regain financial stability.
Case Study
Dana and Peter had a new home, but they worked through several expensive IVF rounds before their first child was born, and their savings and savings capacity suffered.
They were living off credit cards, and they took out new cards to bring others into the black, but began to approach their borrowing capacity.
Without making changes to their budget or loan arrangements, they faced the risk of defaulting on their credit arrangements and not being able to meet living expenses.
Dana and Peter worked through their situation with their financial adviser and mortgage broker, putting in place a budget to prioritise their cash outflows and determine where cuts could be made. They also reviewed all of their key expenditures, to establish whether other providers could provide the same value for a lower cost.
They also worked through their mortgage and consumer debt arrangements, consolidating their consumer loan arrangements into one loan secured by their home, reducing the overall interest cost and repayments due.
With their new budget and savings on the debt, they were able to plan for repayment of all consumer debt within a two year period.
Important Information
Walbrook Wealth Management is a trading name of Barbacane Advisors Pty Ltd (ABN 32 626 694 139; AFSL No. 512465). Barbacane Advisors Pty Ltd is authorised to provide financial services and advice. Walbrook Wealth Management (Credit Representative Number 534783) is authorised under Australian Credit Licence 389328. We have based this communication on information from sources believed to be reliable at the time of its preparation. Despite our best efforts, no guarantee can be given that all information is accurate, reliable and complete. Any opinions expressed in this email are subject to change without notice, and we are not under any obligation to notify you with changes or updates to these opinions. To the extent permitted by law, we accept no liability for any loss or damage as a result of any reliance on this information.
