Guiding consumers since 2009

Turn your debt around in 6 months

By Danielle van Wyk

For many of us, January is the month to set goals, find renewed motivation, and make changes to areas of our lives where we feel that they’re needed. But let’s be honest, as the year and the motivation dwindles, these goals are often forgotten.

That’s why you shouldn’t wait for January to get excited about things. Why not look at a strategy to turn around your debt? We’re mid-way through the year and what a great time to set some goals regarding your finances and see what changes you can make before we head into 2020.

Tip: Do you need professional help in sorting out your debt? If so, click here.


According to Brendan Dale, a personal finance blogger at takechargeofyourmoney.blog, there are four steps to successfully deal with your debt.

Step 1: Know how much debt you have

You can’t improve what you don’t measure, and that is especially true of debt. If you don’t really know how much debt you have it’s hard to know if things are getting better.

Why not start off by making a list of all the debt you have. Ignore your home loan for now and focus on car finance, store cards, credit cards, personal loans, revolving loans, and anything you owe friends or family. Note how much you owe, what you pay each month, what the interest rates (and other fees) are, and whether you are overdue on payments.

This will help you get a clear picture of your debt situation.

Step 2: Find your focus

You may have many debts, big and small, and even though you need to make monthly payments on each one, find a specific one to focus on where you can pay extra money. Some people like to focus on the smallest debt first, pay it off quickly and then start focusing on the next debt.

Once you’ve paid one debt, you’ll have a little more money to pay towards the next and can slowly experience what’s called the “snowball effect” of paying off debt.

If, however, you have overdue debts you would need to focus on getting those sorted before moving on to any other plans.

Step 3: Plan for known expenses

You more than likely have some known expenses coming up: birthday celebrations, car maintenance, school fees, and holidays. Try to cover these expenses without incurring additional debt. One way is to plan upfront and set aside money for these events. Another option is to delay any expenses that are not essential over the next few months.

Take some time to think about the next few months, prioritise your spending, and work out how much money you need to save in order to cover it all.

Step 4: Curb the frivolous spending

Paying off debt and sticking to a financial plan is unfortunately tough and comes with some sacrifices. However, the end goal is certainly worth it.

You may need to say “no” to friends and family over the next few months as you get invited out for dinners, movies, drinks, and all sorts of social events. You don’t need to become a hermit and not do anything, but you need to find the balance and do what you can afford and say no to the things that are a little pricey.

Set up a spending plan and allocate money for necessary and personal expenses and then do your best to stick to it.

We often underestimate the amount of stress caused by debt and the inability to make ends meet.  The anxiety can affect our sleep, relationships, and even our mood. As with anything though, we can learn to manage our money better and we can really change things around.

Taking charge of your money has nothing to do with how much money you have; but rather how and where you spend it.

Need help?

If you’re feeling overwhelmed by your own debt situation it may be time to seek professional help.

To access you free debt assessment today, click here.

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?

 

How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Deals

Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions