Get off the debt treadmill

The December/January period tends to be the time of year when overspending occurs forcing many people to play catch up for the next few months. For some, it will take the rest of the year before the cycle starts all over again.

Unfortunately, many Australians are on the debt treadmill and the 'buy now pay later' regime is not really helping, as many are spending next week’s paycheque before they even receive it.

We tend to avoid looking at our financial situation during the festive/holiday season. But now the kids are out of your hair and back at school, it’s time to think about getting on top of your financials so you can get off the debt treadmill. You can do this by setting up a budget for the year ahead.

Right now, we are in a very low interest environment except for the dreaded credit card, which can charge interest as much as 20 per cent or more. Given this, I would encourage you to start eliminating any short-term, high interest debt you may have accumulated and then start paying off any other debts you may have. Once you clear away your debts, you can start practicing the three laws of wealth creation that I outlined in my latest award winning book, which includes spending less than you earn, investing wisely and leaving it alone so your investments can grow.

So what were the best and worst performing sectors last week?

In stark contrast to the previous week, which saw a sea of red cross through the market, last week most sectors performed well. Information Technology and Healthcare were the best performers, with both up over 2 per cent. These were followed by Consumer Discretionary and Industrials, which were both up over 1 per cent.

As for the worst performing sectors, Energy was down 3 per cent, while Utilities was down over 1 per cent and Communication Services was just in the red.

Looking at the top 100 stocks, the best performers included Janus Henderson Group up over 7 per cent, Reliance Worldwide up over 4 per cent, Boral and Magellan Financial. The worst performers so far this week include Oil Search down over 10 per cent, Treasury Wines Estates, which has continued its slide - down just under 8 per cent with IOOF Holdings not far behind.

So what's next for the Australian share market?

I have often said that a week can be a long time in the market, and this week has been no exception. Last week, I indicated that the market had started to move down as I was expecting. Yet after falling heavily on Monday, it spent the next three days rising to erode the fall of the previous four days.

Right now, neither the bulls nor the bears are in control and, as such, it is best to sit on the sidelines and refrain from buying until a direction is confirmed. What I am confident of is the market is medium to longer term bullish with the All Ordinaries Index likely to rise to around 7,600 points or above this year. I am also confident our market will outperform the US stock markets.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au