Unforeseen circumstances, uninformed decisions, and financial loss are some of the reasons that can make it impossible for you to meet your monthly financial responsibilities and before long you are drowning in so much debt that you’re unable to hold your head above water. Questions such as, ‘Why did I allow myself to make so much debt?’ and ‘How am I going to pay off all this debt?’ will haunt you until you cannot make head or tail of what’s happening with your debt. Before considering Debt Counselling, here are a few steps you can follow to lighten your load and pay off all your debt.
- Try and pay more than the owed balance
If you can, try and pay more than what is expected from you. It doesn’t matter how much more you can afford, every little bit helps you to pay your debts off faster. Even if you are unable to afford an extra payment when the monthly instalment is due, and you have some extra money later in the month, arrange to make an ad-hoc payment. Paying the minimum amount is a very low percentage of what you actually owe thus prolonging the time that it will take to settle your debt.
- Start by paying the most expensive debt first
Calculate which one of the payments you have to make is the most and check which one is at the highest interest rate and aim to pay this debt off first. After paying off the debt that is costing you the most, use the money you were using to pay it off and shift your focus to the next most expensive debt. By following this pattern it will become evidently easier for you to settle the costly debt first.
- Use additional earnings towards paying off debt
Besides paying your monthly salary, the company that you work for might reward you with bonuses and or cash incentives. Resist the temptation to spend this extra earnings on luxuries and rather split it up (or atleast some it) and add it to your monthly instalments for debt in order to better your financial situation.
- Refrain from using or cancel your credit card(s)
Credit cards are one of the main causes of people falling behind on their payments. Because having a credit card makes everything so much more convenient, people use it irresponsibly and without concern. Although banks and retailers offer, which at the time might seem amazing, cash-back vouchers and points you can earn, you will still save more if you make cash purchases.
- Make use of a monthly budget and or spending plan
By drawing up a budget you can exactly see what your income and expenses are and will be able to determine how you need to prioritize. By having a budget it helps you in the sense that you know what you are able to afford and will indicate whether or not you are living above your means. By having a budget you know exactly where your money is going making it easier to manage.
- Cut your spending
Stop spending money (that you don’t have) on stuff that you don’t need. Try something like buying groceries in bulk, especially when they are on sale. Consider visiting websites such as Mister Voucher where you can found the best offers on discounted vouchers and coupons over a vast array of products and services. This will ultimately allow you to save more money to add to your instalments towards our debt.
- Don’t create new debt
This is probably the trickiest part of settling your debt. It is very easy to buy things on credit and or taking out a loan; the hard part is paying it back. Banks, marketers and retailers can offer you your hearts desires and make everything sound very smooth and effortless. They’re the ones who convince you that you want stuff that you really don’t need. For instance, a bank will make you take out a loan to consolidate your debt but at the end of the day it is still up to you to know what you must do in order to settle your debt.
You can not spend fast when you are earning slow. It is very easy falling into a debt trap but not so easy getting out of it. When following these steps you have to discipline yourself and not stray from these steps. Get peace of mind! Start settling your debt, today!
Enzo Leigh Botes