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My debt-busting strategy

Mar 27 2014 12:25
Mike X is one of many Fin24 users to struggle with debt. He describes his plan to step back to move forward to a new, debt-free life:

Good day,
 
I'm about to make a big decision in order to "Beat the debt monster".
 
Although I earn a fairly reasonable salary, over the past five years I have accumulated quite a lot of debt.

This debt is due to rising school fees (private), university fees, second-hand cars for kids, home improvements and so on.

I don't live a lavish lifestyle and little of the debt was spent on a "grand lifestyle".
 
I have decided to sell my house and use the balance to settle all of my debt. Altogether (credit cards, revolving credit loan) I have R200k owed.

I have no other accounts except for the above-mentioned. Car is paid for.

This accumulation of debt happened subtly and slowly (at first), but then accelerated as the interest portion started to become significant.
 
I'm a single person with currently one dependant, and therefore a single income too.
 
I have a bond of R700 000 over my home and plan on receiving R1 000 000 for the sale of my house (after cost of selling, etc).

This would leave me with R100 000 cash which I could then invest.

The idea is to rent at a cost less than the bond repayment and live simply for two years, whereby I could save R200 000 at a rate of R8k per month.

If successfully done I would have recovered my debt repayment, but more importantly, be completely debt free.

I wouldn't be able to replace my current completely, but it would be a small price to pay be debt free.
 
I know there are many people living in a similar situation, and some unfortunately not able sell with a profit.

A lot of people may say "keep your house at all costs", but sometimes one has to step back to be able to move forward.
 
Any criticism or comments would be appreciated.
 
Regards,
Mike

 - Fin24

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* Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.


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