What would life be like without massive debt?

By Harper Banks

If you’ve been overwhelmed by debt, it may be difficult to remember what it was like to have a clear credit history and extra spending money in the bank.

We have a look at the distinction between having debt and being overindebted, and we consider some tips on how to move forward with your life. We then find out what life would be like without massive debt.   

Tip: Debt consolidation may be the best way to get your debt in line – find out more.

Having debt versus being overindebted

The majority of credit-ready adults have debt. This may include unsecured debt, such as a personal loan or a credit card, or secured debt, such as a home loan or vehicle finance.

There’s nothing wrong with being in debt, as long as you’re managing to meet your monthly repayments. Credit can be a useful tool when it’s employed responsibly.

However, DebtBusters, a leading debt counselling company, has found that South Africans are borrowing 25% more than they did five years ago. On average, those seeking debt assistance had not increased their income over this period, and had turned to unsecured debt to support themselves and their families.

This can very readily lead to overindebtedness, which can keep you up at night and cause a great deal of day-to-day stress.

If you think that you’re overindebted, it may be time to consider debt consolidation.

How to escape overindebtedness

Ayanda Ndimande, strategic business development manager for retail credit at Sanlam, says that the idea of being debt-free, or not being overindebted, seems unattainable to many of us.

However, she believes that with the right approach to your finances, you can chip away at the mountain of debt and have a clear view of your finances again.

Here are some tips on how to get your finances back in order:

  • Speak to your creditors: If you’re not meeting your monthly debt obligations, you need to reach out to your creditors and explain that you cannot afford your repayments. They are often understanding, and they can help you adjust your repayments to more realistically suit your budget.
  • Reduce your luxury expenses: You need to be very strict with your finances until you are in the clear. Try to cut unnecessary spending and focus on reducing your debt. Once this is under control, you can celebrate by treating yourself to something special.
  • Try to increase your income: If there’s an opportunity to grow your income, you should jump at it. If you can make more money, you will be able to settle your excess debt sooner. Maybe you can help a friend with their side-hustle, or perhaps you can negotiate a raise.

A future without overwhelming debt

Ndimande says that without debt, your credit score will improve. This means that you may eventually qualify for credit for big-ticket expenses, such as a home loan or a car loan, as credit providers will see you as low-risk.  

She adds that you will also have more disposable income, which, if managed properly, will contribute to wealth creation and a stable financial portfolio.

“In essence, you will move out of the red and return to the black, which is the most fashionable colour for a financial portfolio,” says Ndimande.

She explains that being debt-free will also enable you to set savings goals for the things you have always dreamed about and you will be able to spoil yourself a little.

“You will finally be able to take down the umbrella that was protecting you from the looming storm of debt and move forward with your life,” says Ndimande.

By consolidating your debt, you will be able to simplify your debt repayments – click here for more.

Recent Articles

Featured Request your credit report from the right bureau

With so many different credit bureaus in South Africa, it may be difficult to decide from which one to request your credit report. We have a look at what you should be aware of when selecting a credit bureau.

Applying for a home loan? Consider the repo rate

When you apply for a home loan, one of your top priorities should be to secure a low interest rate. In order to achieve this, you need to be familiar with the repo rate. We find out more about this.

Effective financial planning as a single parent

As a single mom or dad, it can be challenging to keep up with the ever-increasing expenses of raising a child. We have a look at the importance of setting up a budget as a single parent.

How your credit score impacts your insurance – and vice versa

Since insurance is paid in advance, it may seem unrelated to your credit score. However, these two are in fact linked to one another. We find out why insurers look at your credit score.

Deals

Get a FREE flight ticket with Hotel Sky

Price: From R5,200
When: Until 31 January 2022
Where: Johannesburg and Cape Town

Voucher for 2 special at Bakwena Day Spa

Price: From R1,798
When: Until 31 January 2022
Where: Centurion, Hartbeespoort and Stellenbosch

Spier Hotel Summer Special

Price: Available on request
When: Until 31 March 2022
Where: Stellenbosch


Latest Guide

Guide to debt rehabilitation solutions