Seven rules to build financial success

According to Nathan Bell, research director at Intelligent Investor Share Advisor, financial independence brings peace of mind and that while many Australians have put off retirement due to years of poor investment returns there are ways to achieve financial success and weather the impact of tax, the threat of recession and inflation.

Bell advises a cautious approach to debt especially borrowing for products such as margin loans and where possible to avoid personal loans and big credit card balances.

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How To Choose Between A Personal Loan Or Credit Card

According to the Australian Prudential and Regulation Authority (APRA), Australians owed $58.6 billion in personal loans and $40.8 billion was outstanding on credit cards for the year ending December 2012.

In choosing whether to borrow on a credit card or take out a personal loan both options should be carefully considered in relation to interest rates, repayment options, penalties, fees and charges, according to RateCity spokeswoman Michelle Hutchison.

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The best method of reducing debt

Many Australians are looking to reduce personal debt and save more but are seemingly unsure how best to consolidate their debts to achieve this.

According to Wayne Matters, a financial officer with CPS credit union the decision on whether to use a personal loan or the option of the zero interest balance transfer available on certain credit cards on offer as a means to consolidate debt depends on how much a person owes, and how soon they are looking to pay it off.

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Australians Are Paying Down Credit Card Debt

It seems that Australian consumers are becoming increasingly pessimistic about debt with the latest survey from Dun & Bradstreet showing that household debt expectations dropped as low as 18 per cent during the March quarter from 26 per cent. These findings support a Newspoll survey which sampled 1200 people and revealed that Australians are becoming increasingly concerned about paying down debt reducing discretionary spending and generally adopting a conservative monetary approach to spending and personal debt.

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Exceed minimum monthly payment to pay off credit card debt

With Reserve Bank figures showing that average credit card balances had declined by over 2% in the year to November 2012 and balances accruing interest had dropped even faster by over 4% it would suggest that more consumers are switching cards to take advantage of the 0% interest balance transfer offers.

ANZ’s head of consumer credit cards James Hutton says that the secret to paying off credit card debt is to always make regular payments on time and to always pay more than the minimum payment due, adding that of course, paying off the balance in full will avoid paying interest all together.

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America’s ‘cheapest’ family

Having survived America’s economic crisis Steve and Annette Economides, authors of America’s Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams, have developed some clever ways to live frugally on a modest income and feed a family on a tight budget.

With Steve on a low salary of only $13,000 a year at a printing company, and Annette being a stay at home mum the couple used creative methods to live off one income, such as Annette learning how to sew to make her own maternity clothes.

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Defeat Credit Card Debt

According to Zoe Lamont founder of the 10thousandgirl campaign setting a goal and sticking to it is the best way to work your way out of credit card debt.

Ms Lamont says the starting point is to manage your budget and get tough with yourself when it comes to spending habits. She says that it’s important not get overwhelmed by taking small steps to reduce your debt as this builds confidence.

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Using the ‘60%’ Budgeting System

For many households, making ends meet is becoming harder. With the cost of living rising and wages remaining static, having a budget plan that works has never been more important.

And there are lots of budget plans out there to choose from. Some set inflexible limits to monthly expenditure, others recommend taking out a short term personal loan to clear all debts, while others allow for flexibility in spending to accommodate unforeseen circumstances.

The 60% Solution

One of the most popular budgeting systems is the 60% Solution. Invented by former MSN Money editor, Richard Jenkins, it advocates spending 60% of gross household income on fixed expenses such as taxes, insurance, regular bills and basic living expenses.

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