You might be finding you don’t have enough money to make ends meet, but is a loan going to make things easier for you? 

There are many reasons why people get a loan, maybe they need to buy a laptop for school or their washing machine broke. But the best way to stay out of debt is not to get a loan. If you are facing financial hardship, many other options might be better for you in the long run. 

Options to consider before getting a loan:

Payment plans

If you are having problems paying your utilities like your water, electricity and gas, you can actually call up your provider and arrange to pay in instalments.

This means instead of paying the full bill in one go every few months, you can pay smaller amounts each week or fortnight until it is paid off. Money Smart has some great info on how to negotiate a payment plan.

Review your existing payments

Think about things like wifi or your electricity bill. Can you change to a more affordable plan to reduce your monthly spending?

If you have a credit card, make sure it is still working well for you. Can you still afford the monthly payments or is it making you spend more money? Consider thinking about re-assessing your credit card and if it is still the best option. Money Smart has some great information on credit cards.

With things like streaming subscriptions, Spotify, or even donations to charities, make sure they are not putting you in debt or making it harder for you to live. Consider cancelling these extra things for a few months until you get back on track or save the money you need.

Centrelink advance

If you are receiving income support from Centrelink you may be able to apply for a Centrelink advance. A Centrelink advance is where they pay you a sum of money in advance from out of your future payments. You then pay back a part of it every fortnight out of your payment until the sum has been paid off.

The benefit of this method of borrowing money is that they do not charge you interest on the money you borrowed.

No Interest Loans

These are like loans but without the added cost of interest. To find out more about these loans check out our post on no-interest loans or the information on the Good Shepherd Microfinance website here.

Avoid buy now and pay later services 

These are companies like Afterpay, Klarna, and Latitude Pay where you can pay off an item in small instalments over a few weeks or months. They might seem like the best option to buy a new pair of shoes, but they make their money off people not being able to make payments.

Whilst there’s no interest on these payments there are fees. These fees include: 

• late fees
• monthly account-keeping fees 
• payment processing fees
• establishment fees

Whilst these fees may be under $10 each, if you add them up they end up costing you quite a lot.

These services make it easier to overspend and buy what you can’t afford.  And if you accrue debt through these services or are late for payments, it will impact your ability to apply for a loan later in life.

Read more at the MoneySmart website. 

Housemates

If you are finding it hard to pay the rent one suggestion could be looking for a housemate to help with the costs. There are Facebook groups that you can join for a lot of cities, just make sure that you are safe when arranging to meet people online. 

If you are having a financial emergency

If you are in need of money urgently, Money Smart has great Australia-wide information and contacts for housing, income support, emergency relief and financial counselling. The Department of Human Services also has some helpful information on crisis and special help payments that you might be eligible for. 

Check out Financial Counselling Australia to find a counsellor near you, or call 1800 007 007 to speak to one on the phone for free advice.

You can also call the National Debt Helpline, they are open every weekday from 9.30am-4.30pm and their chat is open until 8pm. They offer free counselling to figure out a debt solution that will suit you. 

Aboriginal and Torres Strait Islander people can call Mob Strong Debt Helpline on 1800 808 488. Monday to Friday, 9.30am to 4.30pm.

If you are in debt, call Way Forward on 1300 045 502. Monday to Friday, 9:00am to 7:00pm. If you’re in financial hardship, they can arrange a debt repayment plan on your behalf. This is a free service.

If you are struggling with your mental health in this hard time — please reach out. Call Beyond Blue on 1300 22 46 36, 24 hours a day. Or use their live chat service, available 24 hours a day.