Are you knee-deep in debt and not sure how to dig yourself out? You are not alone.
According to the latest studies, South Africa has experienced high levels of debt in the past few years.
Costs are high and there’s a lot to keep up. So, between the home loans, credit cards, and retail accounts, you might be feeling the mounting financial strain yourself.
To help you and other South Africans that want to become debt-free, we’ve put together this handy guide with the two powerful strategies that can teach you how to get out of debt fast in South Africa whilst saving money.
Sounds impossible? Read on, and you will thank us later.
Of all the ways on how to get out of debt, there are two strategies that will make this nightmare end quicker. In fact, not only will they relieve you of your financial misery, but they will do so smoothly and quickly. Each of these strategies is tailored to your needs, and whether you want to Do it yourself (DIY), or use a professional service and have it Done for you (DFY).
DIY involves only you and your creditor, which means you’ll have to stay motivated and do most of the heavy lifting yourself.
You will need to audit your accounts, get to know your creditors, understand your rights, and stick with a strategic payment strategy.
Getting out of debt on your own can be very challenging. Thankfully, the National Credit Act allows you to take advantage of professional services to help navigate the complexity, deal with creditors, and stick to a more affordable repayment plan.
Done for you, involves getting help from a registered debt management company. In this case, you’ll have a professional team that will take care of the heavy lifting for you.
Here are the steps that you can take to follow the most-effective DIY strategy, known as using an accelerated repayment strategy.
Create an action plan on how to address your financial situation. Know who you owe, how far behind you are on payments, and how much you need to negotiate. If you are able to build a large enough sum to complete the debt settlement process, then continuing on-time payments may be the better option.
Keeping track of your spending is often the most important step in getting your finances in order. By determining what you spend money on and how much you spend, you can make more informed decisions about your money in the future.
Like rolling a snowball across the ground, the debt snowball method builds momentum as you begin repaying creditors.
To get started, list all your debts by balance and start with the smallest account. Pay your minimum obligations on other bills and send extra cash to your smallest debt until it’s paid in full first. As you pay off balances, you’ll create more funds for other debts.
Plus, seeing progress keeps you motivated as you work towards eliminating each of your accounts one-by-one.
On the other hand, the debt avalanche strategy organises debts based on their interest rates. First, you list all your debts from highest to lowest interest rates. Your goal is to pay off your highest-interest debt first while making minimum payments on all your other debts.
This approach cuts interest costs over time and allows you to repay your outstanding debts faster as you progress.
Whatever you do, stick with the strategy and continue to make your payments accordingly. Your momentum will build and you’ll get out of debt in the end.
How about throwing all of your stress and debts on the shoulders of professionals? All you need to do is pay the agreed monthly repayment amount (by the way, professionals can help you to reduce this amount too), and that would be it!
Debt review (or debt counselling) service assists over-indebted consumers who are struggling to pay back their debts. In addition to helping you repay your debt, the debt review process protects you from creditors, simplifies the repayment process by consolidating your debt into one convenient payment, and helps you make your debt repayment affordable.
So, how does debt review work?
When an individual has an imbalance between income and credit expenses, they are considered over-indebted. If you fall into the same category, then you may apply for a debt review to help you take back control.
The debt review process can be summarised as follows:
Anyone that has ever gotten out of debt successfully has employed one of these two strategies, or some variation thereof.
If you want to do it yourself then you might like to check out our debt management tips, and if you’re still on the fence about using a professional service or applying for debt review, then check out our list of the advantages and disadvantages of debt review.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.