Younger households with lower incomes and less stable employment are at risk as banks and mortgage lenders start jacking up interest rates, according to the Reserve Bank of Australia (RBA).

According to the Reserve Bank this week “households with high debt levels are more vulnerable to economic shocks.”

The big four banks have been holding out on passing on higher rates, given the intense political scrutiny on the banking sector. But most analysts expect them to move on rates within months.

“It’s only a matter of time before one of the big four banks hike,” RateCity director of research, Sally Tindall told The Australian.

That means there has never been a more important time to get debt under control.
So here are 8 ways to help you get out of serious debt:

  1. ASIC’s Money Smart advises that you should start by talking to your credit provider. Ask your lender if you can change your repayments or extend your loan. Extending the term gives you more breathing space to deal with other issues.
  2. Consider switching home loans. A different home loan could save you money in interest repayments and fees but you have to make sure it really is a better deal. At least ask around – there are plenty of new lenders in the market hungry for new business. Mortgage brokers have just started a new campaign – so may be time to find one that will refinance.
  3. Tough times call for tough measures. Consider selling that fancy leather jacket or designer handbag on eBay. The extra money can help you pay down your debt. Use eBay!
  4. Reduce your credit card spending. Credit cards have one of the highest interest rates so it’s best that you try to pay off your credit card debt. This is really a no brainer.  We know it’s painful – but it’s so worth it with interest rates of over 30% in some cases.
  5. Relook at your lifestyle. Stop wasteful spending. If you cut back on your lifestyle habits you WILL reduce your household spend. Bring lunch – you can be frugal and have fun meals! And dump the gym and go for a run or stretch in the park.  On these crisp days it’s brilliant.
  6. Stop going on overseas holidays and have a brilliant staycation instead.  You bank the air fares, help the home economy and still have a great time!
  7. Consider taking a second job or working overtime. The extra income will go a long way to help you pare down your debt, and today there have never been more choices.  The gig economy means you can put something you love like dog walking out there online and get some extra cash.
  8. Finally, consider selling your home – you may be better off if you are struggling with your mortgage repayments as it is far better to sell on your terms rather than for the lender to sell it as a mortgagee sale. And the new apartment building boom means there are plenty of fresh, well-designed properties coming on the market to lower rental prices which make a better unit more affordable.