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10 steps to cut your debt

Cape Town - Everyone sometimes has too much month left at the end of their money, but when it happens too often, it is time to take stock and devise a serious plan to get out of the sticky situation.

Here are ten simple steps to help you on your road to living a debt-free life.

1. Acknowledge the fact that debt plays a role in your life.

Recognise that you have accrued debt and that you have a debt problem. 

2. Work out your total debt obligations

List all of your debt obligations comprising who you owe money to, the amount still owed and the interest rates attached.

3. Draw up a realistic monthly budget

List your income and ALL your expenses to monitor where your money is going. Keep it on hand and review it from month to month. Things change. Your budget should too.

4. Prioritise your debt

Work out a payment plan and move debt obligations with the highest interest rates to the top of your list in order to ensure that they are paid off first, as this will reduce the overall amount of interest you will pay.

5. Learn how interest works - this will enable you to better calculate your expenditure and repayments.

6. Set goals and make becoming debt-free one of them.

7. Save money and cut costs

Make a concerted effort to save money - not only in literal rands and cents, but in cutting down on electricity usage, constantly re-assessing your insurance and bank charges and bargain hunting, i.e. shop around for the cheapest prices. The money you save this way can go a long way towards paying your debt.

8. Stop making more debt

Refrain from getting into further debt. When you are done paying off one account, take that very same repayment and put it towards paying off another account. If it was in your budget as a debt repayment, let it stay there as that - even if the creditor changes.

9. Pay more

If you can afford to do so, always try to pay more to your creditors. This will see you paying off your debt quicker than expected. But don't steal from Peter to pay Paul, i.e. do not fall behind on any of your accounts for the sake of paying off another faster, because this is often how you fall into and stay in the debt trap.

10. Seek professional help 

If you see you are struggling to make your debt repayments, look at options like debt counselling before legal action is taken.

Even if you have a debt counsellor or financial advisor, never lose control of your finances. Always know exactly what your position is with regard to your debt. It is your debt - how you manage it determines your life.

- Fin24

Help us help you by taking our second annual Debt survey
and you could win R3 000, or add your voice by  sharing your debt  experiences, debt-busting tips and insights. Have a question? Ask our experts.

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