101 Ways To Get Out Of Debt

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101 WAYS TO GET OUT OF DEBT – AND ON THE ROAD TO WEALTH 

In the late 2000s, as the 2000s boom collapsed into the US sub-prime crisis and the GFC, many people were asking me “What’s the Next Big Thing?” I had sold companies in the takeover boom prior to the 1987 crash, again in the ‘dot-com’ boom prior to the ‘tech wreck’ crash, and I had been bought and sold a few properties and been debt-free in the 2000s credit boom prior to the GFC.

My conclusion at the time was that there was actually no “next big thing” this time. The problem was the world had too much debt – governments, corporates, households. The “Next Big Thing” was to for everyone to get out of debt ASAP. (Personally, we had paid off the home loan in the late 1990s, had no other debts, and had bought a boat and beach house with cash, but the rest of the world was still drowning in a sea of debt.)

So I wrote my next book:

101 Ways to Get Out Of Debt and On the Road to Wealth is the ultimate handbook for anybody who wants to get out of debt and stay out of debt.

This book is an insider’s knowledge of how to beat the lenders at their own game. (I actually started out in the early 1980s as a lender with Citibank and Midland Bank (now HSBC) – first as a mobile lender, and then regional lending manager, and national manager, so I knew all the tricks of the lending game, from the ground up.

Inside you will find 101 practical and proven methods that anybody can use to master their debt. It shows you how to conquer all types of debt, including mortgages, credit cards, car loans, personal loans, investment loans and small business loans.

This is the ultimate handbook for anybody who wants to get out of debt and stay out of debt. It contains dozens of worked examples, charts, tables, ready-reckoners, tips and hints to help you control, minimise and eliminate debts. Almost anybody can use these proven and practical methods – starting today.

There are literally 101 five-minute chapters, each highlighting a different way to get out of debt.

In this book you will learn how to:

• save a fortune in interest
• get out of debt years earlier
• decide which debts to attack first
• find the best lending deals for your needs
• manage repayment problems.

This common-sense approach will get you debt free and on the road to wealth in no time - and that means more control over your life, less stress, and greater long-term security for you and your family.

Even though it was written in the pre-Covid era, the techniques and lessons are exactly the same as today. In fact, the dozens of worked examples in the book are based on a mortgage rate of 7%, which was the typical mortgage interest rate at the time. Then we had the Covid crisis when interest rates were artificially low. But after the Covid crisis and aftermath, mortgage rates have now come back to normal – which is the same as the examples in the book!

Interest rates rise and fall through cycles, but the lessons and techniques for getting out of debt remain constant.

DETAILS:

Published : January 2012

Publisher : Wiley

Paperback : 220 pages

ISBN-10 :  1742169368

ISBN-13 : 978-1742169361

Dimensions : 13.9 x 1.58 x 21 cm

Reviews

Personal debt is the devil for people trying to build wealth.
In this very practical book Ashley Ormond shows us many ways to beat the devil and get on the road to riches.
— Pam Walkley Editor-in-chief, Money magazine

Debt can be a great servant, but a bad master. In this book Ashley will show you simple ways to take control of your debts, and make debt a tool you can use and not something to fear.
— Noel Whittaker Best-selling author and finance columnist, The Sydney Morning Herald and The Age

Australians have been living beyond their means on a diet of cheap debt for too long. This is a must-read book for all those who want to get out of debt and back in control of their finances.
— Chris Cuffe Former CEO, Colonial First State

Many Australians live beyond their means and take on too much debt. Ashley Ormond’s book is by far the best account yet available on understanding the details of debt, the problems that arise when debt becomes excessive and how we can manage and reduce debt to achieve better financial security and happiness for ourselves and our families.
— Dr Don Stammer Economist and journalist, The Australian and BRW magazine

Contents

About the author xi

Part I: The household debt explosion 1
Part II: First things first 11

1. Work out how far in the red you are
2. Compare debts with income
3. Work out your total loan repayment bill
4. Get the facts on all your loans
5. Check your interest rates
6. Add up all those extra fees and charges
7. Sort your debts
8. Prioritize your debts
9. Check your credit rating
10. Make a calendar and set targets

Part III: Mortgages
11. Do the numbers
12. Increase your mortgage repayments
13. Make one-off extra payments
14. Use pay rises to increase your loan repayments
15. Shorten the life of the loan
16. Use your income patterns to pay off sooner
17. Pay fortnightly instead of monthly
18. Shop around for a lower rate
19. Keep repayments flat when rates fall
20. Don’t keep switching loans
21. When refinancing, stick with your existing lender if you can
22. Always choose principal-and-interest loans over interest-only loans
23. Stick with floating mortgages
24. Avoid redraw mortgages
25. Be careful of offset accounts
26. Don’t use line-of-credit mortgages
27. Beware the honeymoon rate nightmare
28. Don’t capitalize loans
29. Upgrade your subprime loan
30. Consolidate debt at your peril!
31. Don’t pay for features you don’t need
32. Take into account all fees
33. All fees are negotiable
34. Don’t count on your partner’s income to borrow more
35. Mortgage brokers — spot the double take
36. Check that you are getting the correct rate changes
37. Let a tenant pay the mortgage
38. Consider long-term house-sitting
39. Plan a mortgage-burning party in advance
40. Pay off the mortgage before investing
41. Don’t bank on your superannuation fund to pay off the mortgage
42. Let grown-up kids pay part of your mortgage
43. Consider mortgage contributions instead of presents
44. Downsize — smaller house, smaller mortgage
45. Trade up houses, but trade down debt
46. Try the payout two-step
47. Avoid complex mortgage-reduction schemes
48. If you have to sell, stay in control

Part IV: Credit cards
49. Find out how much you spend on credit cards
50. Choose the right card for your needs
51. Avoid credit card surfing
52. Never use cash advances
53. Cut up your store cards
54. Never pay just the minimum amount
55. Keep payments flat
56. Use direct debits
57. Check every item on statements
58. Once you’ve paid it off, cut it up
59. Consider changing to charge cards
60. If you have a charge card, don’t take up the credit option
61. Reduce your credit limits
62. Do leave home without it!

Part V: Car loans, personal loans, boat loans and store loans
63. Renegotiate, don’t refinance
64. Always pay a cash deposit
65. Never buy new
66. Don’t self-insure
67. Don’t use store loans
68. If you fall into arrears, tell your lender as soon as possible

Part VI: Investment loans
69. Get the credit bureau to limit more lending
70. Celebrate each win
71. Use principal-and-interest loans for investment properties
72. Avoid fixed-rate loans for rental properties
73. Avoid lines of credit for investment properties
74. Use your tax refund
75. Don’t use deposit bonds
76. Don’t borrow for the holiday house
77. Borrow in the same currency as your income
78. Beware the margin on share loans
79. Use dividends to pay off the principal on share loans

Part VII: Small business debts
80. Get your personal finances sorted before starting a business
81. Keep business finances separate
82. Use your business plan
83. Don’t make capital purchases using the overdraft
84. Don’t extend your lease term too long
85. Avoid high lease residuals
86. When buying a business, do your research
87. Don’t borrow to buy a franchise
88. Be careful of line-of-credit mortgages for business
89. Use supplier terms and customer terms sensibly
90. Sell your debtors
91. Maximise depreciation
92. Never pay full price for business equipment
93. Business succession to reduce debt

Part VIII: Avoiding and minimising debt
94. Maintain an emergency cash fund
95. Use separate accounts for savings goals
96. No deposit, no mortgage
97. Renters, get a 10 to 15 per cent discount on your first home
98. Don’t borrow to put money into superannuation
99. Avoid tax-based schemes
100. Be careful if guaranteeing other people's debts
101. Beware the lender who says you can afford a loan

Part IX: The final pay-off 189
Part X: Useful resources 191
Index 195

About the Author

Ashley Ormond was one of Australia’s first PC-equipped ‘mobile lenders’, starting out in the early 1980s with a financial calculator, a dual-floppy drive Compaq portable PC, and a portable Epson thermal printer in his car. This was before the age of mobile phones, the internet, Windows, Excel, or even hard drives. It was back in the days when:

• Lenders actually analyzed each borrower's ability to repay.
• Borrowers actually had to have a job or other source of income.
• Borrowers actually had to have proof of a savings record, proof of income, proof of assets.
• Lenders had to actually think about how each debt would be repaid, instead of just shoveling money out the door.
• Lenders actually retained the credit risk and retained the ownership of loans, instead of just selling them to unsuspecting bond-holders on the other side of the world.

His banking and finance career included several senior executive roles at major Australian and international banking and finance groups, including running branch networks, lending operations, product development, pricing, and financial control. His formal qualifications include a Bachelor and Masters in Law, a Bachelor of Arts in Economic History, and a Graduate Diploma in Applied Finance and Investment. He has also lectured for the Securities Institute of Australia. Since ‘retiring’ at 40, he has been a director of several companies, including listed, private, and not-for-profit companies and a charitable foundation.

Ashley is the principal of Investing 101 Pty Ltd, a specialist investment research firm that holds an Australian Financial Services Licence. He is a sought-after speaker and commentator on financial markets and has written two best-selling books on finance: How to Give Your Kids $1 Million Each! and $1 Million for Life.