With the cost of living in Australia steadily rising each year, it comes as no surprise that a large proportion of Australians are struggling with their debts and finances.

Recent numbers by Mortgage Choice revealed that over half of Australians reported that they felt either “very worried” or “concerned” about their current financial situation in 2015. The percentage of Australians stating concern was up from 2014 (45%) and 2013 (44.6%).

So, what would an experienced Bankruptcy Trustee suggest to Australians who want to get debt free?

At Australian Bankruptcy Services, our registered Bankruptcy Trustee advises Aussies to pay off their non tax-deductible debts first.

Non tax-deductible debts (i.e. “bad debt”) are the debts that you have to your name that will not deliver future return on your investment. Typical examples are a personal or car loan and the all-too-familiar credit card debt. Mortgage interest for your home is also not tax deductible in Australia.

By paying off non tax-deductible debts first, you will reduce the high interest on these debts, thereby vastly improving your cash flow. You can then redirect this money towards your “good debts” (i.e. tax-deductible debt that will provide you with future wealth such as investment property). This will ultimately help you to secure a brighter financial future.

Easy – right?

Not always. While the benefits to paying off your “bad debt” quickly are clear, having the funds to be able to do this is often not easily attainable. Otherwise, everyone would be debt free!

If your debts have gotten the best of you, Australian Bankruptcy Services can help. Sometimes declaring bankruptcy may be the only option left for individuals struggling with debts. If you want to receive a tailored and comprehensive financial assessment of your situation before making any decisions, contact an Australian Bankruptcy Services Bankruptcy Trustee for free today.