General

Tips for Getting Out of Debt


1. MAKE A PAYMENT PLAN

If you want to get out of debt, particularly with a strict budget, you need a plan. Start by determining just how much debt you have and writing down the different creditors that you owe  money to. Then, order your payments by which debt you think needs to be paid off first (you can determine this by looking at the amount owed, the terms of the loan, and the interest rate).

Next, you need to determine how much you can afford to pay off each month. Once you have determined how much you can pay each month, you need to figure out how much of that total amount will go to each loan. Paying off a high interest loan in its entirety has many benefits, but if you have a loan that doesn’t require payments yet (like a school loan) you should also factor that in and probably pay off other loans first.

Another important point is that if you are deeply in debt, you can also attempt to negotiate a repayment plan with your credit providers, which may help you reduce your payments or get better loan terms.

1.1 Financial Assessment Plan:

Total Income – Total Deductions (on salary advice) – Necessary Expenses (for day to day use) = Distribution  Amount (amount to be paid to your creditors)

 

2. SET UP AUTOMATIC DEDUCTIONS

We all have limited budgets. You might feel that a small payment isn’t worth it. Remember every little bit helps!

Automated deductions (stop orders), will prevent you from falling in arrears, and finding excuses to skip payments.

Payments from your bank account will be on the same set date. A date you choose! This will help you do your budget for the rest of the month. You would know exactly what amount you have left for spending.

Determine how much you can afford to pay on your installments

And

Set up automated payments!

 

2.1 Benefits of Automated Deductions:

  • Convenient
  • Gives you Peace of Mind
  • It’s Better for your Credit Record
  • Better Control of Finances
  • Helps your Cash Flow
  • Safes you Time
  • Manage your Budget

 

3. CUT COSTS

You cannot get out of debt and financial stress without cutting on unnecessary expenses. Small sacrifices will lead to your financial freedom.

Start by evaluating your monthly spending, and see what you can change. Cutting expenses will leave more available funds to help you pay off your debt. This may mean that you stop eating out at restaurants, cut DSTV, or choose to workout at home or outside instead of at the gym.

If your budget is already pretty limited, it can be hard to find places to cut down, but cutting expenses really will help you get out of debt faster, as long as you use the extra money to pay off your debt. Sometimes, even small cuts make a difference, such as making coffee at home instead of getting take away coffee on your way to work.

GOLDEN RULE: If you have any extra money – PAY OFF YOUR DEBTS!

3.1 Ways to Save Money on Monthly Expenses:

  • Use Public  Transportation
  • Carpool to Work
  • Cut Down on Electricity
  • Install Power Saving Bulbs
  • Lower the Temperature on your Geyser
  • Reduce your Entertainment  Expenses
  • Reduce eating out or getting take-aways
  • Stop buying so much Clothing
  • Move to a lower DSTV Package

 

4. CHANGE YOUR SPENDING HABITS

Initially, this tip sounds a lot like cutting costs, but it’s actually very different. Somehow you got into debt, and there are   several potential reasons. You may have debt such as a home loan, or school fees, and these debts are probably  completely legitimate and even necessary. You also might have debt from poor spending choices in the past. Either way, you have to decide to stop spending now if you want to get out of debt quickly.

This means that even if a home loan is a reasonable debt, you need to be proactive about paying off that debt, and you also need to be content not to go out and purchase a bigger or more expensive home. If you have credit card debt, you need to stay away from stores (or wherever you are tempted to use your card unnecessarily), and choose not to spend money.

Regardless of whether you are a careful spender or an impulse spender, if you truly want to be debt-free, you need to choose to pay debt down instead of accruing more.

4.1 Tips to Kick Your Bad Spending Habits:

  • Take Only the Cash you Need
  • Know your Spending Triggers
  • Visualize the Prize
  • Think Before you Buy
  • Shop with a List
  • Know your Weaknesses & Avoid Them

 

5. GET HELP

See a professional person equipped and educated to advise you objectively and according to your legal rights.

ALL OUR FIRST CONSULTATIONS ARE FREE OF CHARGE!!

Seeking help from a Debt Counsellor might be a good idea if you feel overwhelmed by your debt, or you are just not sure how to move forward. You can look at our website to get started (www.hvdmattorneys.co.za). You will get free or affordable advice regarding how to deal with your current financial problems, advise on how to manage your money, and even help developing a budget plan that will work for you.

Is it a good idea to borrow money to pay debts? If you have multiple different debts, you can consider consolidating your loans. Of course, you want to consider the interest rate and loan details of any new loan you might accept. However, a short-term unsecured loan is very risky, and it’s often best to avoid these if possible. Although few people want to ask their parents, other family members  or friends for help, if you know someone who can afford to help you pay off your loans in return for a no-interest (or even lower interest) loan, this might be a good idea if you can agree on the terms.

5.1 Our Specific Services:

  • Debt Rehabilitation
  • Voluntary Debt Re-arrangements
  • ITC Clearances
  • Rescission of Judgement
  • Perusal of Agreements
  • Free Budgeting Advice and Guidance

 

BE GOOD………. GET OUT OF DEBT!