In debt and constantly playing catch-up? You can relieve the stress by settling debts faster, writes Angelique Ruzicka
Everyone gets into debt at some point. A home loan, credit cards, store cards, vehicle finance or a personal loan, these can all add up. And, if you aren’t careful, debt can become unmanageable.
‘For optimum financial health, you need to get rid of your debt as fast as possible. The longer you put off repaying your loans, the more interest they accumulate and the more you end up repaying in the long run,’ says Michael Bowren, CEO and cofounder of fincheck.co.za, an online financial product-comparison portal.
The good news is that there are several things you can do to pay off your debt faster. These are five of the most important:
1. Cut back on luxuries
By spending less on luxuries and allocating that money to paying off your debt instead, you can settle debts faster. ‘Remove yourself from the temptations of eating out, unnecessary purchases and spending your money on consumables [items that are used up and then replaced].
It is far better to sacrifice in the short term,’ says Bowren.
2. Consolidate debt
This is not an instant solution, but a consolidation loan bundles all your debt into a single loan, and your new lender can decrease the amount of interest you pay.
3. Brush up on your financial knowledge
Seek help from a professional such as a debt counsellor or financial advisor. Or sign up to free education programmes like truthaboutmoney.co.za.
This online course includes telephonic debt management and counselling, to help you manage your money better.
4. ASK your creditors
‘Talk to your existing credit providers and explain your financial situation to them.
In some instances, they may even be willing to negotiate different terms of repayment,’ says a spokesperson for insurance and investment product provider 1Life. Negotiating better terms can help you pay off your loans a little faster.
5. Pay more
Even if you pay just a little more than your required monthly instalment, the extra money you put down on your loans helps reduce the interest calculated on your outstanding debt.
After you have paid back all your debt, try to avoid taking on too much credit in the future. Going without an unnecessary item now helps reduce the stress of being overindebted again later.
This is article first appeared in the Setpember 2017 issue of Club Magazine.
Prices correct at time of publishing