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Recommended Ways To Turn Your Debt Around

Recommended Ways to Turn Your Debt Around

Debt is such a familiar topic these days that you may feel: “Ah, same old talks, what on earth can be done about it?” Well, a little bit of introspection cannot hurt.

If you look at increases and fuel or grocery prices – everything is continually snowballing. Many of these upsurges are intertwined and you can surely feel it in your pocket these days. What’s more – you consider extra credit or loans as a solution to service all your agreements. Sound familiar?

The National Credit Regulator (NCR) highlights that there are almost ten million consumers with impaired credit records. What a staggering amount of people. Are you one of them? If so, what are you currently enduring to keep your financials afloat? If not, are you sure that you will continue to keep up with your bills in future?

Here are two fictional examples (that you may associate with) as well as a few recommended solutions to assist you in turning your debt around:

Fictional Case Study #1

Mrs Naidoo has been living in one of South Africa’s big cities for a few years…

Originally from a small town where everybody knows everybody, it was quite the adjustment at first but she has settled in nicely.

Sadly, living costs are no joke, and with a struggling economy, Mrs Naidoo has found herself unable to afford her debt – like so many South Africans (and perhaps you can associate with her situation). So, she fell behind on her credit card debt (R 4 344 instalment amount), clothing account (R 1 481 instalment amount) and furniture account (R 703 instalment amount). It has become hard to keep track of all the repayments, and with her credit record looking less than ideal she won’t qualify for a consolidation loan.

Possible considerations / solutions

If you are finding yourself in the same boat as Mrs Naidoo, here is what you can do:

  • Prioritise your monthly debt repayments

Don’t unnerve yourself any further about falling behind with your repayments. Take a deep breath and decide whether you want to pay off the lowest amount (furniture account) first – also known as the Snowball method. OR, tackle the credit card’s amount first since it has the highest interest rate (known as the Avalanche method).

  • Cut down on unnecessary expenses

You can take a look at your bank statements to see if there are any ‘spending leaks’. These leaks, like weekly takeaway meals or your daily coffee-buys, can be avoided from now on. Also, try and cut on other ‘luxuries’ and consider taking a look at your service agreements (like TV channels, phone or gym contracts). Remember: the goal is to recalculate and improve your financial situation.

  • Sell your Unused Stuff and add to your savings

Since July is also referred to as National Savings Month, you have to gather some extra cash to help service your debt repayments. Get rid of all your clutter and items that have been unused and tucked away for far too long. There are various online platforms (bidorbuy.co.za or OLX for example) that you can consider – do thorough research and remember, safety first.

And, lastly:

  • Avoid borrowing from Peter to pay Paul

With only a ‘small’ amount of debt that you need to pay off, try and see what you can do from your side. Avoid borrowing money from friends or family members. And, since you need to be an A-plus student to apply for a consolidation loan, rather look at practical alternatives to get your payments up to date. Consider a few income boosts and get your debt under control as soon as possible.

Fictional Case Study #2

Mr Ndlovu and his wife have recently celebrated their 15-year anniversary and live in a quaint home in sunny South Africa…

They have two vehicles, and although not the sports cars Mr Ndlovu is always dreaming about, they are adequate to get them to-and-from work and driving around their kids. They have a vehicle loan (R 14 578 instalment amount), credit card (R 11 808 instalment amount) and a home loan (R 3 626 instalment amount).

Unfortunately, hard times have fallen upon this family, and no matter how much they try to get their finances under control, it simply isn’t possible. They are considering professional help.

A recommended solution to consider

If you have already tried the recommended #1 considerations and are finding yourself in the same situation as the Ndlovu family – get help sooner rather than later.

Do you owe quite a large sum, and are your debt repayments in major arrears? Rather avoid regret and any form of creditor harassment. Consider the debt review process. It is not all glitz and glamour BUT if it is your last resort – it can surely assist you to turn your debt situation around. A bit of comfort: the process is regulated and recommended by the NCR.

Want to know more about debt review? Contact the DebtSafe team: