Change your life: Reduce Debt.



It’s easier than you think to reduce your debt and change your life. It is simply a matter of changing your mindset.

Debt can be crippling, but with a new mindset, you can eradicate it. Image courtesy of businessofdesign.

Wondering why you feel like you’re always in debt or spending too much? It’s all in your mind according to  a so-called “wealth psychologist” we spoke to.

Kristina Pilmer from the The Wealth Tutor says over-spending is based on bad habits and to the psychology of spending. Whether you are $10,000 in debt or $1 million in the red, the same thought patterns apply.

Here are her 7 tips to decrease your debt:

Stop making more debt – Don’t accept that debt is a part of life, realise that happiness can come from a lot of things that can’t be bought – financial peace of mind being one of them, “Before buying anything, ask yourself if you need it, and if you do, is there a cheaper alternative?”

Prioritise debt – “All debt is not created equal. While it may make sense initially to pay off an old debt or a small debt, you should always prioritise the debt with the highest interest rate.” Reducing not only the amount of time you are in debt but also the resulting sum you will be forking out.

Don’t be fooled – Triple check the fine print – introductory offers at credit card companies are great but always remember to check what awaits you when the period ends. “Moving from one card to the next to lower interest payments is often a band-aid solution. The only way to kill your credit debt forever is to make long term changes in your spending behaviour.”

Budget – “A budget is as psychologically beneficial as it is financially. It gives you peace of mind that you are on track and in control of your finances, which greatly reduces the stress that inevitably comes with debt.” I encourage my clients to take notice of their purchases and decide what is really important to them and what areas they can cut back on.

Make a budget and add an amount which you can realistically afford to repay for debt, whether it is $20 a week or $200. “It’s helpful to make your required payments on pay day so you won’t be tempted to dip into this money.”

Make repayments strategically – “Lay out your credit card debt in order of interest rates to work out where your debt repayments should be going.

Ensure all your minimum payments are made to avoid fees related to missing a payment. Then pay back the debt at the top pf your list and move downwards until you’re in the clear.”

Reward yourself – “For some people, rewarding themselves for hitting debt reduction targets is a hugely effective motivator.

Of course, it’s important to think of low-cost ways to reward yourself such as a pamper night with friends, for example.”

Don’t beat yourself up  A strategic debt repayment plan does not always run smoothly. “Somewhere along the road there will be an emergency and an unforeseen expense which means that you wont meet your goal that month or that week. The important thing is not to let this get you down, and to get back track as soon as you can.”


Lucy Bortolazzo


Lucy is a journalism graduate who feels most at home when wandering the streets of foreign cities. She has a passion for design, travel and everything food, and uses the excuse “I’m curious” to explain just about everything.

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