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Three more tips to pay off your debt faster

Continuing from previous months, here are our next three tips to pay your debt off faster. These aren’t presented in any particular order because everyone’s situation is unique. Just take the tips that work best for you and if you’ve got any questions, feel free to reach out to us, or ask your financial or mortgage adviser.

1. Keep your cash in an offset account

With most variable loans, it’s likely that you’ll have a redraw account and offset account. Make sure that you keep as much of your cash in one of these accounts as they offset your interest, helping you to pay your loan off sooner. Don’t keep separate accounts for holidays, the kids or a rainy day, get it all working to reduce your interest. If you need multiple accounts to help manage your cash flow and savings, choose a loan that allows multiple offset accounts.

2. Pay off the loans costing you the most first

Do you have an investment loan as well as a home loan? Make sure you’re paying off your most expensive loan first. Be careful though, because the loan with the highest interest rate may not be the most expensive. If you have borrowed money for investment purposes, it’s possible that the loan is tax deductible, meaning the ATO is paying for part of your interest. If that is the case, it’s likely your non-tax deductible debt is more expensive and should be paid off first.

3. If you’re expecting, start living off a single income

If you’re expecting a child soon, it’s likely your income will drop for a period of time. Get used to living off a single income now. Use the money earned from the second income up until the baby arrives to get your debt down. By the time you go on maternity or paternity leave, you’ll have less debt and be used to living off one income.

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