Debt can quickly become overwhelming, particularly when rising everyday expenses leave less room in the monthly budget.
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The good news is that taking control of your finances starts with a few practical steps.
Here’s how to manage debt more effectively.
Know exactly what you owe
According to Standard Bank, it is important to know exactly who you owe and how much. Start by listing every debt, including credit cards, personal loans, store accounts and vehicle finance.
Record the outstanding balance, interest rate, monthly instalment and payment date for each one. Having a clear picture makes it easier to prioritise repayments and identify where your money is going.
Create a realistic budget
A workable budget should account for essentials such as housing, food, transport and utilities, as well as debt repayments.
Review your bank statements to identify unnecessary spending and redirect whatever you can towards reducing debt. Avoid creating a budget that is so restrictive you cannot maintain it.
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Prioritise high-interest debt
Nedbank states that it’s always best to first pay off the debt with the highest interest rate. Once minimum payments are covered, consider putting additional money towards the debt charging the highest interest.
Reducing expensive debt can help limit the amount you pay in interest over time. At the same time, avoid taking on new credit unless it is genuinely necessary.
Ask for help early
If you are struggling to meet your monthly obligations, don’t wait until you have missed several payments.
South Africa’s National Credit Regulator (NCR) says debt counselling is available to consumers who are over-indebted and unable to meet their commitments. A registered debt counsellor can assess your finances and help restructure qualifying debts.
Make debt management a habit
Review your budget regularly, pay accounts on time and celebrate progress as balances decrease. Most importantly, be cautious of anyone pressuring you to enter debt review without fully explaining the process.
The NCR advises consumers to make informed decisions and voluntarily approach a debt counsellor.
Also see: How to avoid ‘buy-now, pay-later’ debt
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