Secrets to Why Debt Reduction is So Vital for Your Financial Health

Living with debt is never a good idea if you want to make long-term financial plans. Every cent you use to service debt is money that could have been invested in your future. Investment is extremely important, and can lead to a more comfortable and secure retirement. Just as smart investment can lead to a more secure future, mismanaging your money and incurring debts can lead to financial difficulty down the track. Poor money management can prevent you from taking advantage of many different kinds of financial opportunities, and may effect your credit report.

Debt affects your ability to save and invest for the future

Every time you make a repayment on a loan or pay off the balance of your credit card, you are spending money that could have been more usefully invested in other ways, such as building that nest egg for the future. Reducing your total amount of debt is vital for your long-term financial health.

At the moment, wealth accumulation may seem like an unattainable goal. However, you need to make sure that you have money to live comfortably during retirement. Constantly using money to pay off your debts will ultimately have a significant impact on your ability to build the kind of future you deserve.

For example, if you spend $500 each and every month servicing debt (which is a conservative estimate based on the rising level of consumer debt in Australia), you may find it extremely difficult to save money. The sooner you are able to begin investing and putting that $500 to better use, the more secure your future financial situation will be.

Debt affects your credit rating and your future ability to obtain credit

Mismanaging your debts, failing to make scheduled repayments or making late payments on a regular basis can have a significant impact on your future ability to obtain credit. If you do not service your debts responsibly, your bank or financial institution can contact a credit reporting agency and request that your failure to make a repayment be noted on your credit report. Having an impaired credit report means that other lenders may be more reluctant to give you credit.

An impaired credit report will affect all your future credit applications. Each time you apply for credit, such as a mortgage, a car loan, a credit card or an overdraft, your credit history will be checked and you may be refused because you are deemed a credit risk. A credit default can remain on your credit report for 5 years, while a serious credit infringement can remain on your credit report for 7 years.

If you have a seriously impaired credit report, you will probably have difficulty purchasing a home or moving into a rental property. Lenders and credit providers in Australia rely on your credit report to determine whether you are a credit risk. If you have had difficulty repaying debts in the past, lenders will be far more cautious and may refuse your application for credit. It is extremely important to manage your debts responsibly and tackle problems at an early stage before they get out of hand. Debt can have a way of building up if left unchecked.

Australian Debt Reduction is part of Australia's largest Debt Relief organisation and has assisted more than 10,000 Australian's eliminate their debt. Find out more at http://www.australian-debt-reduction.com.au

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Debt Relief Information:

Related Articles

The Simple $10 Debt Elimination Solution
Ask a friend what resolutions they made for 2004 and your bound to hear them reply "Pay off my credit cards." Ask them how they planned on reaching that goal and many of them will not have a clear cut answer.
Do It Yourself Debt Relief
With mounting bills and unforeseen hardships, you may be considering some form of debt relief. There are many options to help you, but the best may actually be you helping yourself.
How to Avoid Bankruptcy
Bankruptcy is a legal way to offer folks with high interest debt a fresh financial start in life. In case you are considering personal bankruptcy as an answer to your debt problems, you are not alone.
Eight Ways to Consolidate Debt
Next to winning the lottery, a debt consolidation loan is a debtor's dream. With one monthly payment and a fixed monthly payment schedule, you can actually see an end to those monthly payments.
How Do You Spell Debt Relief?
Of all the problems possible in a marriage, finances cause the most marital discord. Many singles consider finances to be their most worrisome issue.
Can You Escape the Trap of Ever Growing Debt?
It's difficult not to be concerned when facing numbers like these:43% of U.S.
Hide That Car! Fighting the Repo Man
Vehicle repossession may appear justified in circumstances where a person is generally being irresponsible and otherwise able to meet this financial obligation. However, what about that hardworking guy or gal who paid their automobile note dutifully for three years, and missed one payment? Why should their car be repossessed?Basically, the lender owns your car until it is paid in full.
Whatever You Do....Dont Save Money!
No, that's not a misprint. Even though falling interest rates are good when you want to get a loan, they are bad for people with savings accounts.
What Is A Chapter 13 Bankruptcy?
Many consumers that are bogged down in debt frequently turn to bankruptcy as a form of restoring their financial status back to a zero balance. Unfortunately many of these same consumers are confused when it comes to the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy.
Bankruptcy Reform: Designed to Protect Big Business
Who will benefit from the new bankruptcy reform laws? The financial services industry and other big business groups, that's who.These groups contributed millions of dollars to elect Bush and other Republican candidates in 2000 and 2004, with the goal of overhauling the bankruptcy system.
What the Mail on Sunday Said
Anyone considering Bankruptcy may have experienced fear after reading an article written in The Mail on Sunday with the headline "Bankruptcy cheats face crackdown". But, how much of what was written was in context of the reality of Bankruptcy as it is today?The article implied that since The Enterprise Act 2002 the rise in the number of people going bankrupt was due to them using the Bankruptcy route as a "Get out of jail free card".
Your Ticket Out of Debt Relief
If you are in debt over your head and wondering if you will ever find a way out, the answer is yes! Serious financial problems can make life miserable and cause a great deal of stress and worry. Many people have found themselves in the situation of avoiding calls from creditors and wondering how they will ever get out of debt.
Creating A Realistic Budget
Budgeting -- ooh, what a scary word! If you want to frighten someone whose finances are out of control, suggest that they tally up their expenses on a piece of paper. We all understand the value of such an exercise, but when it comes to the practicality of putting a budget together, we get cold feet.
Credit Repair? Its All Up to You
Log onto to a search engine such as google.com and type in the term credit repair.
Help for the Single Mother with Managing Credit and Debt
Today's consumers benefit drastically from the usefulness of credit. Credit cards are especially useful for large purchases, emergency situations, making reservations, identification, and protection from fraud.
Bankruptcy - Bankruptcy Myths
Bankruptcy has long been a big question mark in the eyes of the consumer. After all they don't teach us about bankruptcy in school.
A History of Money and Banking Secrets That Banks Dont Want Published
A History of Money and TradeTo start with a history of money and debt, we must go back many years ago when people used to trade their wares for the things they wanted and needed.In place of money or Federal Reserve Notes, you could trade a well made pistol for a cow, which you could eat or trade a remainder of for other items like clothing.
Fast Track Out of Debt
You go to the mail box and scan - a couple fliers (nah), your magazine subscription (yes!) and bills (groan). Every month the bills show up and as you sigh and take out your check book you wonder if you will ever be free.
How to Deal with Bill Collectors
So you've screwed up. You're drowning in debt.
Credit Counseling or Bankruptcy: Which is Best for You?
People often get to a place where they simply can't pay their bills, especially in today's economy which is not particularly sympathetic toward the poor or even the middle class. Inflation has impacted nearly every facet of daily life including food, gas, rent, clothes, utility bills and more.