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WITH ever-spiralling costs and interest another interest rate hike a strong possibility, debt troubles loom large in many consumers' lives.
While the tendency is to take the ostrich approach, the first thing one needs to do is face the debt issue head on, because simply ignoring it is only going to make the situation that much worse.
“Denial begins a long time before the financial problem becomes evident; the sooner debt is taken care of the sooner you can take control of your life,” says Godfrey Madanhire, professional life-coach and motivational speaker.
Know your debt
“When you know how much you owe you are in a better position to plan how you will pay it back, as you will have an idea of how much it will grow,” says Madanhire.
Keeping a record of your transactions and listing everything should make things easier when you need to gauge how serious the problem really is.
Then you’re ready to start the process.
Prioritise your debt
You need to prioritise your debt as soon as you are able to afford it. Start with the most urgent.
“This is where you will need to consider the interest rate because things such as personal loans and credit cards have a high interest rate thus should be paid first,” says Madanhire.
Calculate your debt every month and deal with it systematically
At the beginning of every month, you need to calculate the minimum amount needed for your monthly payments.
Also calculate your living expenses such as rent, food, petrol, etc.
Add another 20% to cover emergencies and set the money aside. What is left should go towards your debts that are accruing the highest interest payments.
If you see that the amount you owe is beyond what you are capable of repaying, contacting your creditors should be your next move. Most will be willing to renegotiate either a lower amount or lighter interest rates, provided you can make a commitment to regular repayments.
“Should you miss a few payments during this time, your credit record is likely to take a knock. As soon as your debts have been repaid you should rectify this,” says Madanhire.
Even though debt should be avoided, it doesn’t have to hold you hostage financially.
Start repaying as much as you can as soon as you can, and you should be able to regain a sense of financial freedom more quickly.
- Fin24
*Godfrey Madanhire holds a Diploma in Education from the University of Zimbabwe and a Bachelor of Technology in Education and Management from the Tshwane University of Technology. He trains careers and life-skills at schools across South Africa and is regular contributor to titles such as Education SA.
**Do you have a successful strategy for beating the debt monster? If yes, what tips do you have for Fin24 users? Let us know and you could get published.
While the tendency is to take the ostrich approach, the first thing one needs to do is face the debt issue head on, because simply ignoring it is only going to make the situation that much worse.
“Denial begins a long time before the financial problem becomes evident; the sooner debt is taken care of the sooner you can take control of your life,” says Godfrey Madanhire, professional life-coach and motivational speaker.
Know your debt
“When you know how much you owe you are in a better position to plan how you will pay it back, as you will have an idea of how much it will grow,” says Madanhire.
Keeping a record of your transactions and listing everything should make things easier when you need to gauge how serious the problem really is.
Then you’re ready to start the process.
Prioritise your debt
You need to prioritise your debt as soon as you are able to afford it. Start with the most urgent.
“This is where you will need to consider the interest rate because things such as personal loans and credit cards have a high interest rate thus should be paid first,” says Madanhire.
Calculate your debt every month and deal with it systematically
At the beginning of every month, you need to calculate the minimum amount needed for your monthly payments.
Also calculate your living expenses such as rent, food, petrol, etc.
Add another 20% to cover emergencies and set the money aside. What is left should go towards your debts that are accruing the highest interest payments.
If you see that the amount you owe is beyond what you are capable of repaying, contacting your creditors should be your next move. Most will be willing to renegotiate either a lower amount or lighter interest rates, provided you can make a commitment to regular repayments.
“Should you miss a few payments during this time, your credit record is likely to take a knock. As soon as your debts have been repaid you should rectify this,” says Madanhire.
Even though debt should be avoided, it doesn’t have to hold you hostage financially.
Start repaying as much as you can as soon as you can, and you should be able to regain a sense of financial freedom more quickly.
- Fin24
*Godfrey Madanhire holds a Diploma in Education from the University of Zimbabwe and a Bachelor of Technology in Education and Management from the Tshwane University of Technology. He trains careers and life-skills at schools across South Africa and is regular contributor to titles such as Education SA.
**Do you have a successful strategy for beating the debt monster? If yes, what tips do you have for Fin24 users? Let us know and you could get published.
