Budget your way out of debt

By Lindsay de Freitas
27 January 2017

Be grateful and thankful for what you have, rather than always wishing you had more – that is what gets you into debt in the first place.


The only way for you to make a real change is to make a commitment to changing your lifestyle so that one day you’ll have real wealth – money in the bank, not money owing to the bank.

On these pages I provide ways to tackle the problem, but at the end of the day the only person who can get you out of debt is you.

Tackle the smallest debt first

By now you have written up a budget to find a few extra rand to go towards debt repayments. Keep in mind that this more austere budget is just while you’re getting on top of your debts.

Read more: ‘My debt never stops growing’

It’s a lot like dieting: in order to lose weight, you have to cut back on your calorie intake, but once you reach your goal weight, you move onto a maintenance plan.

Like a diet, results are what help keep you on track. Many diets recommend a two-week kick-start so that you drop enough kilograms to keep you motivated.

You need to apply the same logic to your debt repayments. Take your smallest debt – the one that will be the easiest to re- pay – and just klap it – pay it off as quickly as possible.

For most people this would be a store card, credit card or overdraft. This also tends to be your most expensive debt with the highest interest rate, so you are saving on in- terest repayments by targeting these smaller debts first.

Read more: You are not legally bound to pay old debt

Once you’ve paid off this debt, you use the money freed up to target the next debt and so on until your debts start to fall like dominoes. (Dave Ramsey, author of Total Money)

How to use R500 per month to pay off R30 000 in two years

Jenny wants to be debt free but only has R500 extra per month to reach her goal.

¦¦ Edgars card R2 000, minimum repayment R200 per month

¦¦ Foschini card R3 000, minimum repayment R300 per month

¦¦ Bank credit card R10 000, minimum repayment R300 per month

¦¦ Branded credit card R15 000, minimum repayment R500 per month

January to March

Jenny pays an additional R500 into her Edgars card, increasing the payment to R700 per month. Within three months her card is paid off.

April to June

Jenny now uses the R700 she was paying to Edgars to increase her payments to Foschini, increasing them to R1 000 per month. Her Foschini card is paid off within three months.

Jenny takes the R1 000 she was paying to Foschini and ploughs this into her bank credit card, making that payment R1 300 per month. Her credit card is paid off within nine months.

April to December

The R1 300 used to pay off the bank credit card is now used to add to Jenny’s branded credit card repayment, bringing the amount to R1 800. It takes nine months to pay off this card.

Jenny is now debt free by finding just an extra R500 per month."

The above is an extract from Maya On Money: Implement Your Money Plan by financial journalist Maya Fisher-French

MoneyMaya On Money: Implement Your Money Plan, by Maya Fisher-French (Tafelberg, R198 from Takealot.com)

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