Money and Life
(Financial Planning Association of Australia)
If youâre feeling the heat of mounting bills, donât panic. You can negotiate a better deal that lets you hang onto your cash while you weather the COVID-19 pandemic.
With thousands of Aussies still out of work due to COVID-19, household budgets are no doubt feeling stretched right now.
Even worse, with so many of us spending more time at home than ever before, bill shock is starting to set in.
Household electricity, gas and water use have all jumped by upwards of 15 per cent â meaning many of us are facing hefty bills on top of lower than usual income.
If you need to reign in your spending, or youâre struggling to pay your debts due to ongoing financial hardship, you can negotiate a better deal.
What are my options?
If youâre struggling to pay back money you owe, donât hesitate to take action straight away.
Most creditors, be they banks, utility companies or other service providers, would prefer to work with you to resolve the issue. They donât want you to default on your debt, as that costs them more.
Options you can explore include temporarily halting payments, changing the amount of your repayments, paying a lessor lump sum to settle the debt or getting a reduction or a waiver on your debt.
How to negotiate with creditors
Hereâs what you need to do to negotiate like a pro.
1. Know what you can afford to pay
The first step before contacting creditors is to work out what you can actually afford to repay.
Get a clear picture of your finances by doing a simple household budget. We recommend using a planning tool such as the MoneySmart Budget Planner.
Read more: Managing your financial health during the COVID-19 pandemic
2. Identify opportunities to save
With your budget in hand, take a look at all of your expenses. Which ones do you need to reduce and by how much?
Donât leave anything out. As well as your major living expenses or bills, you can negotiate a better deal on many services, such as phone and internet bills, credit card interest rates and insurance.
Next, research the market and find competitor offers. You can use these to negotiate with your suppliers.
If you need to tackle personal, business or home loan repayments, you may have further options available.
Read more: What you need to know if you deferred your loan repayments
3. Contact your creditors
This is where your negotiating skills come into play.
Contact each organisation one at a time, starting with the most urgent unpaid bills and expenses.
Depending on the level of financial hardship youâre experiencing, and what outcome youâre looking for, you could approach the negotiation in one of two ways.
Difficulty paying your debts
If youâre experiencing financial hardship and you need to renegotiate your outstanding bills, do the following:
1. Call the organisationâs customer service line and ask to speak to the team that looks after customers experiencing financial difficulty.
2. Explain your situation and what led to your financial hardship.
3. Let them know what you can afford to pay. Ask for a discount on the outstanding bill and explain what you think would be a fair arrangement to pay off the debt.
4. Ask if they can offer you a better deal going forward, as you donât want to run into the same problem again in future.
5. Get the repayment arrangement confirmed by the creditor in writing.
Negotiating a better deal
If youâre all paid up, but youâd like to reduce your repayments going forward, try this approach:
1. Start by contacting the customer service team or sales department.
2. Make sure to be polite, friendly and assertive when asking for help. For example, âHi NAME, how are you? Iâm doing great, thanks. I have an issue that Iâm hoping you can help me with.â
3. Mention how long youâve been a customer and that youâd really like to stay with them, but youâd like to get a better deal.
4. If itâs relevant you can mention why you need the discount, but donât feel you need to give a reason. For example, âMy hours at work have been reduced due to the pandemic, so Iâm having to cut back on a few things.â
5. Mention the better competitor deal you saw and ask if they can match it. Repeat that youâd like to remain as a loyal customer, but reiterate that you wonât be able to keep the service if they canât offer you a better rate.
6. Donât give up if the response is no, or âIâm sorry, thereâs nothing I can do.â Ask to speak to someone who has authority to offer you a discount. Repeat steps 3, 4 & 5 above.
7. Get them to confirm the new offer in writing.
Read more: Why financial wellbeing is a pillar of good health
Five bonus negotiating tips
1. Ask for more discount than you want.
2. Always speak to someone who has the authority to negotiate. If the person who answers your call says they canât help, donât take no for an answer. Instead, ask to speak to the supervisor or manager.
3. Always speak in a pleasant, assertive voice, no matter the response.
4. Remember, this is an opportunity for them to win your loyalty and your business. Donât feel bad about asking for a discount.
5. Sometimes if you really canât get a better deal, the best option is to switch providers.
What to do if youâre still in debt
If you donât have any luck resolving the issue on your own, or youâre feeling overwhelmed by your unpaid debts, speak to a financial counsellor straight away.
You can contact the National Debt Helpline on 1800 007 007 for free, confidential and independent advice from a trained financial counsellor. Thereâs also lots of useful information on their website.
Remember, everyone can benefit from asking for a better deal. Youâre the customer after all and if you donât ask, you wonât receive (a discount!).
If you could benefit from more personalised advice to help you reach your financial goals, speak to a Financial Planner today.
