Are both on good incomes, but they have been living beyond their means. They’d like to go overseas in a year or two, but need to sort out their debts first.
They have a $10,000 loan for Steve’s car, $2,000 on each of their credit cards and hire purchase agreements for furniture and appliances totalling $3,800.
Steve and Danya are worried what might happen if one of them loses their job, so they ring the ASB 24 hour call centre on 0800 272 007 to help them come up with a plan.
Steve & Danya's Plan
1. Financial SnapshotGet a clear picture of your finances by filling out a My Finances Form.
2. Reduce expenditure
Review bank statements to see where non essential spending can be cut, consider moving to cheaper accommodation; research ways to save on food, power, entertainment.
3. Make a budget
Budget how much money you expect to receive and how you will spend it. Start with essential payments then work out how much you have left for discretionary items.
4. New sources of income
Consider taking on a part-time job, or getting a flatmate.
5. Pay your bills first
Set up regular transfers to pay off debts and meet regular bills each time you get paid.
6. Pay in instalments
Negotiate to pay large bills in more affordable weekly instalments.
7. Consolidate your debt
Consolidate all of your loans (car, credit cards and higher purchase) into one fortnightly payment, at a competitive interest rate.
How Steve & Danya implemented the plan
Moving home wasn’t really an option, so Danya and Steve decided to get a flatmate to help with rent and bills.
They started to take lunch to work everyday, and reduced entertainment costs by entertaining at home more.
Their power bills were also very high, so they now make an effort to be energy efficient at home, turning off the heated towel rail and lights when not in use.
By consolidating their debts into one ASB personal loan they are now charged a lower interest rate, have only one loan payment to think about and know exactly when they will become debt free.
Both of their salaries now go into one joint account, and they set up payments to cover their bills for the next two weeks (including the loan payment) until they get paid again.
Steve also took on a job in a record store on Saturdays to increase their income.
We now have a much better idea about where our money is going and I am less likely to spend without thinking. The extra income means that we can plan to be out of debt and start saving for our trip soon.
