Do you have or are you currently accumulating a HECS/HELP debt? You may still be at university and are starting to worry about your HECS debt. You may have gotten your first full time job and are facing payments, or perhaps you’ve had a few jobs already and have avoided payments up until now. Facing debt and repayments is tough at any time in life, which is why we have some tips on how to be debt free without too much stress.
The income threshold at which HECS debt owners must make payments changes each year. For the 2010-11 financial year, any individual with a HECS/HELP debt who earns over $44,912 must pay 4% of their income to their HECS debt. The percentage of payment required increases with the individual’s annual income, with up to 8% of your income going to your HECS debt for those who earn over $83,408. Fortunately, unlike general loans, there are no interest or loan fees attached to HELP debts.
Whether or not you are paying off your HECS/HELP debt at the moment or it is a little while away yet, it is a good idea to be prepared and think about your future financial position. Here are a few handy tips:
- Voluntary payments: We know, it doesn’t sound all that appealing! But if you are currently paying off your debt and think you could spare a few extra dollars a month, it is a great idea to be debt free early and not have to worry about it later on. Plus, by making voluntary payments you can receive discounts of up to 10% on your loan if you pay off more than $500.
- The B Word: Budget. Budgeting is always a good idea, no matter what situation you are in. Keeping tabs on where you are spending money and where you don’t need to be is important. We suggest utilizing as many online tools as you can; for example budget planners or debt calculators.
- Look after other debts first: Debt management is one of our top tips. Consolidating your credit card payments, mortgage payments, and car payments before you even think about your HECS/HELP debt. Although payments are compulsory over a certain income bracket, your HECS debt does not acquire interest, unlike your other debts. If you are in the bracket for compulsory payments but believe that you are unable to make the payments, debt arrangements can be made to postpone payments for up to two years.
Keep these tips in mind when you start thinking about paying off your HECS/HELP debt. If you need some more information or extra financial advice, why not contact a financial advisor? The team at lifeafterdebt.com.au can assist you to consolidate your current debts and to manage them appropriately, and to find the perfect money-saving plan for your individual needs. Contact us today on 1300 237 669 for debt advice and assistance.