Don't get caught in the debt trap

By admin
22 May 2014

Millions of South Africans find themselves too deep in debt to get out of it on their own . Avoid getting into the debt trap with these six easy tips .

  1. 1.                Don’t wait until you’ve finished school

You don’t have to wait until you’re finished with school and have a job to start paying off your student loan , pay what you can when you can . Even if you can only afford to pay the interest, it makes a difference.

  1. Avoid differing

Financial institutions allow debtors to put payments on hold for a set amount of time without any legal consequences when they are going through financial difficulties. Although this arrangement could be a life saver when you have no other options your loan still gains interest during this time. It is better to arrange to pay less than the initial payment plan rather than not paying anything at all.

  1. Consolidate your debt

Many people have more than one loan or more than one creditor and often find themselves trying to figure out which debt to pay this month and which one they can ignore the next month.  Consolidating your debt means putting it all together and making one payment that will deal with all your creditors. This way you are sure all your debt is paid on time and you might even lower your interest rates.

  1. 4.                Talk to your creditors

It is important to talk to your creditors and make them aware of any changes in your financial situation whether it means you are unable to keep up with your monthly payments or if you need more time. To avoid legal trouble and make it easier for yourself, it is important to talk to your creditors.

  1. 5.                Automate your payments

Get a debit order for your debt so that it is automatically paid when you get paid. This way you avoid making paying an option and you prioritise making payments.

  1. Pay more than your minimum

It’s easy to just pay the minimum but that keeps debt hanging over your head, collecting interest for longer. Pay as much as you can whenever you can. There is no deadline for your monthly payments or a limit to how many times you can pay per month. Whenever you have a little more money or get a mid month cash injection put more money into paying off your loans and you could finish paying much quicker than you expected and avoid some interest.