Debt: How much is too much?

Is debt taking a huge slice out of your take-home pay? If more than 30% is going straight to creditors, it’s a warning sign. At 40% or more, it’s a flashing red light – and usually a sign that there’s too much month left at the end of your money. 

The good news is you can take back control. 

Here are three ways to restructure what you owe and get some breathing room back into your budget.

1. Get a fresh start with debt counselling 

If you’re feeling overwhelmed, this is a formal way to hit the reset button. A registered counsellor renegotiates your interest rates with your creditors – often dropping them from over 24% to around 2.5% – and simplifies everything into one affordable monthly payment. You get immediate legal protection (no more phone calls from creditors) and can save thousands of rands in interest every month.

Things to consider: It’s a formal legal process and you must have an income to qualify. You won’t be able to take on new credit until you’ve cleared your current debt, which is actually a great way to break the cycle. 

2. Simplify payments with a consolidation loan

If you’re juggling store cards, credit cards, and personal loans – all with different due dates – a consolidation loan makes keeping up with your payments much easier. One payment, one date – and much less of a headache. It’s a good option if you’re stressed, but still keeping your head above water.

Things to consider: A new consolidation loan can sometimes come with high interest and creditors can still pursue you. Debt counselling may offer better protection and lower rates than a standard bank loan.  

3. Budget planning and debt management

If your debt is under that 30% mark but money still feels tight, you might just need a better roadmap. Expert guidance can help you talk to your creditors and set up a plan you can actually stick to. The benefit is no formal ‘flag’ on your credit record and you can still access credit.

Things to consider: This takes serious discipline and is only a feasible option if your monthly repayments are below 30% of your income. Also, without the legal protection of debt counselling you, you’re on your own if you miss a payment.  

Our JustMoney Coach pro-tip

The tighter your budget, the more formal a solution you need. Don’t wait for a crisis – start with a free assessment to see how much you’re paying for your debt before deciding which option is best.