Unless you are privileged, most Australians will be in debt at some point in their life. From borrowing a high sum to buy a house to running up a credit card bill, living with a debt is just something that most people have to put up with. Here are a few of the most common types of debt:
One bill that can leave a nasty shock is the tax bill from the Australian Taxation Office (ATO). But at tax time there are plenty of options to pay this bill. There is the option to apply for automated and online payment plans for those with a debt of $100,000 or less, or a personal discussion with the ATO can assist those with a debt that exceeds that amount. In situations where this type of debt will leave you in dire financial hardship, the ATO has the ability to release a certain amount of the debt. Additionally, there is the option of a tax debt loan to give the desired support to clear any outstanding payment due.
Substantial business debt can soon build up while attempting to grow your business, expand into new markets, or buy new stock. This is often seen when it is necessary to borrow money to raise the desired capital. From business credit cards and loans, as well as the wide range of overheads involved in running a business, it is very easy to let things get out of control. In times of a difficult economy this can quickly make things a lot worse. Any difficulties with business debt should be tackled as soon as possible. Prioritize the outstanding payments and look at professional financial advice or seeking other consolidation options.
Borrowing money to purchase a home is a must for most people. A home loan is likely to be several hundred-thousand dollars. This makes it the biggest financial responsibility and lasts for a good number of years. Plus, there is the need to consider the interest charges that will be applied over the lifetime of the loan.
Financial discipline is essential when taking out a home loan. There are a few steps that help pay down this debt, such as looking for rates elsewhere every so often and making extra payments if possible to speed up the process.
Credit cards give instant gratification and make it easy to spend money that you don’t really have. Many people spend without thinking about the long-term consequences. If it isn’t possible to pay back the money spent before the interest charges come into effect, the debt will soon start to rise. While the credit cards are convenient, they can have very high interest rates, with some rates at 20% or more. Also, if this type of debt is spread across several cards, the risk of the debt getting completely out of control is that much more possible.
If you are in a position of experiencing severe debt issues and threatened with legal action because of your ATO or other debts then the potential of applying for bankruptcy may be the preferred option.