The older we get the more complex our financial affairs can become and unless we are very lucky we will all have debt in one form or another during our lives. One of the secrets to creating good cash flow and building your savings is to try to avoid some common debt traps.

1.THE EXCESSIVE HOME LOAN

Home ownership is the great Australian dream. It feels good owning our home.

Unfortunately some home buyers get carried away with the dream and do not consider the reality of servicing a large loan, they haven’t planned for changing circumstances, such as rate increases/loss of income.

2.IMPULSE PURCHASES

There are times when you just have to have something now. You need a new car/Kids need new laptops for school. The only problem is you don’t have money in the bank to cover these costs. Credit cards and personal loans can help you manage these cashflow dilemmas in the short-term, but you may want to use them in moderation.