How just R500 can settle a R30 000 debt


Budgeting and knowing where your money is going is all good and well, but how do you use this knowledge to get out of debt? 

If you have spent time analysing your actual spending I can guarantee you that there will be somewhere you can save money. Whether it is by cutting back on take-aways, reducing your data usage or finding smart ways to bank, there are always areas of wastage that create a saving opportunity - even if it’s just R500 per month.

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In this week's Show Your Money Who's Boss campagin Maya Fisher-French gives us some helpful tips on how to get yourself out of debt. 

Financial management app 22seven helps you create your budget and find the hidden money lurking in your bank account. Throughout the campaign Maya has focused on what 22seven is, what the security measures are and how 22seven can help you curb your spending.  

Download the app here, link your account get R25 airtime to tell family and friends about the app. 

Tell us:

Have you ever been in debt and how did you get out of it?

SMS your comments to 35697 using the keyword “22seven”(SMS costs R1.50) or email us at
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When what you owe on your credit cards, store cards and personal loans closely resembles the GDP of a small country, you may feel that R500 is just a drop in the ocean and will never have any impact on reducing your debt levels. The temptation is to just to bury your head in the sand and use the R500 for retail therapy instead! The good news is that R500 is far more powerful than you realise.

Whilst editing the South African version of Total Money Makeover by US money expert Dave Ramsey, I discovered the snowball effect of paying off debt, a very powerful tool in becoming debt-free.

The concept is very simple – rather than trying to accelerate all your debt repayments select your smallest debt first and pay this off as quickly as possible. Firstly it is a great psychological win to have a debt settled, but secondly it frees up the money you were spending in repayments on that debt to target your next debt. Once the second debt is settled you have now freed up debt repayments from two loans added to your R500 budget saving and to tackle your larger debts. 

In my book Maya on Money: Implement your Money Plan, I used Dave Ramsey’s snowball effect to show how just R500 extra each month could settle R30 000 of debt within 2 years. 

In this scenario you have the following debts:

  • Clothing account R2000, minimum repayment R200 per month
  • Retail store account R3000, 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

Month 1 to 3

You pay an additional R500 into your clothing account increasing the payment to R700 pm. Within three months the account is paid off. You close the account immediately!

Month 4 to 6

Use the R700 you were paying into the clothing account to increase your payments to your retail store account, increasing those payments to R1000 per month. The retail store account is settled within three months. Again you need to close the account to avoid the temptation to use it otherwise you derail the debt repayment plan.

Month 7 to 14

With the store accounts closed, it is now time to tackle your credit card. Take the R1000 you were paying into the retail store account and increase your credit card payments to R1300. Within nine months your credit card is paid off. Either close the account or reduce your credit limit to just R500. Credit cards can be useful payment methods but only if you transfer money in at the beginning of the month.

Month 15 to 23

The R1300 used to pay off the bank credit card is now used to add to the repayments on the branded credit card bringing the repayment amount to R1800. Within just nine months this card is paid off.

You are now debt-free after finding just R500 extra each month in your budget. This assumes of course that you stick to your budget and do not take on any other credit during this period. Not only are you debt-free but you have R1800 of disposable income to start investing.

Hopefully this exercise will provide some motivation to start with that budget. As part of the Show Your Money Who’s Boss campaign you can download the 22seven app and track your Net Value which is a graphic illustration of money you have and money you owe. As you settle that debt, so your Net Value will grow.

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