Simple plan to get out of debt

(iStock)
(iStock)

Cape Town - "I have a savings plan," writes Fin24 user Andre Bothma.

He managed to move from being R20 000 in debt to now saving R 8 000 per month - and even giving R5 000 per month to his local church.

"Our combined salary is R30 000, thus we live off 56% of our income," he explains. At the same time he cautions that his plan is "simple, but difficult".

He writes:

You must get a written budget. Track your expenses from your bank statements and create a draft budget from that. The first step is to make sure that your income is more than your expenses.

- Save monthly to hit a third of your monthly salary. If you earn R3 000 per month, your target for this step  is R1 000. This amount saved is only for emergencies;

- Pay off all your debt from the smallest to largest. This is the debt snowball method and does not include your house payment;

- Now build your emergency fund up until you have three to six months of living expenses saved up;

- Put 15% of your gross income towards retirement savings;
 
- Pay off your mortgage bond as fast as possible;

- Broaden your investment portfolio, but never invest in something you don’t understand.

Do you have a successful savings plan or story? Share it with us.

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