With ten million South Africans faced with impaired credit records, we took a look at how to effectively manage your debt.
About ten million adult South Africans are faced with impaired credit records from missing three or more monthly payments, negative listing, and negative judgement and administration orders against them. It’s time you solve your debt problem the right way.
1. Be Honest About Your Problem
You need to realise that your current debt situation has accumulated to a point where you need to take action. Be proactive by setting a goal to become debt free.Set realistic and achievable goals, otherwise you are just going to frustrate yourself and end up abandoning the whole plan.
2. Calculate How Much You Owe
Create a comprehensive list of all the debts you owe, how much you still owe and the interest rates involved.Write down the actual figure, the interest amount, the total and the amount you can pay toward it. Then work out how long its going to take to pay it off.
3. Prioritise High Interest Rate Debt
Create a plan for your debt repayments where you prioritise the debts with high interest rates first. Make sure you pay those off first so you can reduce the amount of interest you pay overall.
4. Plan Your Budget
There are plenty of easy-to-use online budget planners that you can make use of. If you prefer the old-fashioned way, you can simply create an Excel Spreadsheet. Keep reviewing your financial situation, adding or subtracting as you go along. Once you pay off one debt, don't think you can use that money on a night out. Rather disperse it among your other debts to start lowering those!
5. Optimise Your Spending
Make a concerted effort to put a bit of money away each month in a savings account. You can do this by cutting household costs and any extra monthly expenses you don’t need. Take a good look at where your money is going and review whether you can cut any costs.One of the best ways is to lower your insurance premiums. Whether it be your household, car, or both. In fact, if you combine home and car insurance, you will be knocking a large chunk off the overall premium
6. Don’t Get More Credit
You should avoid getting any more credit, you need to deal with your current debt problem before making it worse. You should only consider applying for more credit once you are completely debt free.
7. Seek Help Through Debt Counselling
You can get debt counselling to help you solve your debt issues. Debt counselling was introduced by the National Credit Act in 2007 as a formal government-sanction debt management solution to help South Africans settle their debt quickly. There are costs related to this but it is a viable and helpful alternative. Go to www.ncr.org.za to find out more.