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Are you drowning in debt? Here are steps to set you free

By Faeza
14 March 2017

ARE you suffocating under a mountain of debt? The beginning of the year is a

great time to make a fresh financial start and get yourself free from debt. If you commit yourself to be more disciplined with money and follow a few basic steps, you will be able to significantly reduce or even eliminate your debt before

the end of the year.

ACKNOWLEDGE THE PROBLEM

Before you can fix your debt situation, you need to admit to yourself that you are in trouble. If the amount of money you owe is getting bigger every month, then you need to adjust your financial behaviour. Pace and prepare yourself.

DON’T EXPECT A QUICK FIX

Your debt may have accumulated at a surprisingly rapid rate, and chances are that it will take you quite some time to get rid of it. Borrowing money to pay off your existing debt

will put you in even more debt. Even if you suddenly come into a lump sum of money to enable you to pay off all of your debt in one go, you’ll soon find yourself in financial difficulty again if you don’t change your spending habits.

HOW MUCH DO YOU OWE?

It’s important that you know exactly how much debt you are in. Make a list of all your debts. Include in it the name of the bank, retailer or individual you owe money, the total

amount you owe them and the minimum monthly repayments.

DON’T TAKE ON MORE DEBT

Before you can start clearing your debt, it’s crucial that you don’t borrow any more money. Don’t open any new accounts and stop buying things on credit. You want less debt, not more.

START A FUND

Put aside some money in a savings account and only use it for unforeseen expenses. That way, when your geyser bursts or you need an emergency dental treatment, you have some money saved up. Your emergency fund should ideally cover three to six months of your normal living expenses.

SPEND LESS

The fact that you are in debt suggests that you live beyond your means. To fix the problem, you need to change your spending habits. These tips will help you spend less:

¦ Draw up a monthly budget showing how much money you earn and how much you spend on rent, car payment, groceries, transport, school fees and so on. Stick to that budget.

¦ Keep track of your spending by collecting till slips and writing down how much you spend on which goods and services. It’s important to find out exactly what you’re spending your money on in order to identify areas where you can cut back.

PRIORITISE YOUR DEBT

Concentrate your efforts on eliminating those debts that carry the highest interest first, and then target the next most expensive debt on your list.

MAKE MORE MONEY

Growing your income will give you the cash-in-hand you need to clear all your debts. Ask your boss for a salary increase or look for a betterpaying new job. Get a second job that you can do after hours or at home on weekends. But make sure that it won’t affect your existing job

in any way.