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Free yourself from expensive debt through consolidation

By Reporter 30 November 1999 | 1 minute read

Mounting debt is a pressure that sadly a growing number of Australians are all too familiar with, but the good news is that with some careful restructuring your financial strain can be lifted.


Juggling debts accrued with credit cards, personal loans and store cards can be a challenge. Not only do you have to remember when all your payments are due, the chances are you’re also getting slugged with the higher rates of interest associated with unsecured debt.

Some debts such as credit cards carry hefty interest rates – sometimes as high as 20 per cent or more. When debts start to spiral, you may find that every dollar you repay is swallowed by interest charges, leaving little or nothing to reduce the principal debt.

But by consolidating your debts into one manageable pool you’ll find it easier to get back on top of your commitments and start reducing the overall outstanding balance; it is also considerably easier to keep track of your repayment commitments.


Debt consolidation works by allowing you to roll all of your accumulated debts into one loan. For homeowners with equity in their homes it may be possible to roll high-interest debt into a comparatively low interest mortgage.

If you’ve already repaid some of your home loan, for example, or if your property has gone up in value over the years, you may be able to borrow against this equity to level your outstanding debts. Through doing this you may also reduce your monthly outgoings and improve your household cash flow.

For debt consolidation to be truly successful you need to be smart about it. Bear in mind that by adding thousands of dollars of short-term debt to your home loan it will inevitably take you longer to repay the total amount, and it could end up costing you more in the long run.

For example, you need to consider any fees associated with refinancing your mortgage or other debt – such as exit fees and related charges – and costs to take out a new mortgage, like application fees. Once these are all factored in, you need to ensure you’re in an overall better financial position; if you are not aware of the fees or conditions on your current mortgage, or need clarification, speak with your broker.

Just remember, if you do consolidate your debts make every effort possible to avoid falling into the same situation in a few months time – so reduce your credit card limit and stick to just one card. It’s also worth setting a budget to make sure that you don’t overspend.



Debt refers to the amount of money borrowed from a creditor with the intention to pay back at a specified date.


Debt refers to the amount of money borrowed from a creditor with the intention to pay back at a specified date.

Free yourself from expensive debt through consolidation
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