HOW TO GET OUT OF DEBT – TIPS AND TOOLS

Many people are finding it very hard to pay off their debts and live a reasonable lifestyle during the current credit crunch. According to the National Credit Regulator’s (NCR) website, it is possible for people to get out of debt before it is too late.

Don’t ignore your debt

When you are in a situation where you have a lot of debt, and you battle to pay, do not ignore it. Rather contact the credit provider, explain the situation and ask if you could please repay under different conditions, eg lower monthly instalments/interest rates.

Prioritise and Pay your debt

Formulate a monthly income and expense budget. Contact me to help you if you are not sure how to formulate a budget. When structuring your budget, ensure that you pay essentials like housing, water and electricity and insurance first. Then make provision for day-to-day expenses. Now you can look at the debts you have, paying those with the highest interest rate first and the rest in descending order. As you pay off one debt, you will have more money available to pay off the next ones.

Avoid borrowing to pay off debt

Do not take out any further loans to help pay off the debt burden you are already carrying.

Cut down on expenses

At this stage, you will probably need to make a list of your needs and the nice-to-haves, which you will have to live without for a while. Should you have items like expensive luxury cars that you can no longer afford, it is a good idea to try to sell these items before they get repossessed. Speak to a registered financial service provider before you cancel any policies or insurance.

Start Saving

Should you have any money left over after paying all your creditors, it is wise to save money and put it aside for emergencies that may occur.

Contact a debt counsellor

I am willing to assist consumers who are not yet over-indebted, but are battling financially.

The key to successfully paying off your debt lies in the self-discipline employed to stick to your plan. It is important for you to discuss your financial situation with your spouse and children, and help them to understand that life is going to be hard for a while, but it is all worth it in the long run. 

Further reading:

What is debt counselling?

Process of debt counselling

When should you seek debt counselling?

Strategies for wise borrowing

 

 

Copyright © 2010 Amelia Aitken

 

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