This guide will break down these strategies into simple, easy-to-understand steps, with examples that are relatable to everyday life in South Africa.
1. Understand the Debt You Have
The first step is to write down what you owe. This includes knowing the total amount of debt, the interest rates, and the monthly payments for each loan or credit account.
How to Do It:
List all your debts (credit card, car loan, student loan, etc.).
For each debt, write down how much you still owe, the loan's interest rate, and the monthly payment minimum amount.
Calculate how much of your income goes toward paying off debt.
Example: If you have a credit card debt of R5,000 with an interest rate of 18%, and a car loan balance of R40,000 with an interest rate of 14%, you need to know how much you’re paying toward each debt each month to understand where your money is going.
2. Prioritize High-Interest Debt
Not all debt is equal. Some debts, like credit card debt, have high interest rates, which means you’re paying much more over time. It’s important to focus on paying off high-interest debt first to save money in the long run.
How to Do It:
Look at which of your debts have the highest interest rates.
Allocate extra payments toward these high-interest debts while making minimum payments on others.
Example: If you’re paying off a credit card debt at 18% interest and a car loan at 14% interest, pay extra toward the credit card first. Once it's paid off, move on to the car loan. By doing this, you reduce the overall amount of interest you pay over time.
Tip:
Use the "debt avalanche" method: pay off the debt with the highest interest rate first, then move on to the next highest. This method minimizes the interest you pay overall.
3. Consolidate Your Debt
Debt consolidation means combining multiple debts into one loan with a lower interest rate, making it easier to manage. This strategy can help you streamline payments and save on interest.
How to Do It:
Consider taking out a personal loan or applying for a debt consolidation loan.
Use the loan to pay off multiple high-interest debts, leaving you with one monthly payment at a lower interest rate.
Example: Let’s say you have three loans: a credit card with R5,000 at 18%, a personal loan with R10,000 at 15%, and a store card debt with R2,000 at 22%. If you consolidate these into one loan at a 10% interest rate, you will pay less interest overall and have just one payment to manage.
Tip:
Look for debt consolidation options with no hidden fees and make sure you understand the terms before committing.
4. Negotiate with Creditors
If you're struggling to make payments, don’t ignore your creditors. In many cases, they are willing to work with you, either by reducing your interest rate, extending your payment period, or offering a payment holiday.
How to Do It:
Contact your creditors and explain your situation.
Ask if they can reduce your interest rate or offer a lower minimum payment for a few months.
Don’t be afraid to negotiate for better terms, especially if you’ve been a loyal customer.
Example: If you're struggling to make your car loan payments, call your bank and explain your financial situation. They may offer to extend your loan term or give you a temporary break from payments.
5. Create a Debt Repayment Plan
To tackle debt, you need a clear and organized plan. Without a strategy, it’s easy to feel overwhelmed and miss payments. A debt repayment plan helps you stay focused on eliminating your debt.
How to Do It:
Start with a list all of your debts, their amounts and their interest rates.
Determine how much extra money you can allocate each month to pay off debt.
Create a repayment timeline to show when you expect to be debt-free.
Example: If you have R50,000 in total debt, and you can afford to pay R3,000 extra per month, you can plan to pay off the debt in around 18 months. Seeing the timeline helps you stay motivated.
Tip:
Use the "debt snowball" method: pay off your smallest debt first while making minimum payments on larger debts. Once the smallest debt is paid off, move on to the next one in line. This method gives you quick wins that can motivate you to continue.
6. Cut Unnecessary Spending
To make more room for debt repayment, you need to trim your budget and reduce unnecessary expenses. Cutting back on non-essential spending frees up money that can go toward paying off debt faster.
How to Do It:
Review your monthly expenses and look for areas to cut back.
Cancel unused subscriptions (Netflix, gym memberships, etc.).
Reduce spending on luxuries like eating out or entertainment.
Example: If you’re spending R1,500 a month on takeaways and eating out, cutting this down to R500 a month can free up R1,000 for debt repayment. It may not seem like much, but over time, it adds up.
7. Increase Your Income
Increasing your income is another way to accelerate debt repayment. Look for opportunities to bring in extra cash by taking on a side hustle, freelancing, or even selling unwanted items.
How to Do It:
Start a side hustle (such as tutoring, freelance writing, or driving for Uber).
Sell items you no longer need (electronics, clothes, or furniture).
Ask for a raise or look for a higher-paying job if possible.
Example: If you earn an extra R2,000 a month from a side hustle or part-time job, you can use this money to make extra payments toward your debts, reducing your balance more quickly.
8. Avoid Taking on More Debt
While you’re working on paying off your current debt, avoid taking on more. Adding more debt to your pile will only make it harder to get back on track.
How to Do It:
Resist the urge to use credit cards for non-essential purchases.
If you must use credit, pay it off in full before the due date to avoid interest charges.
Example: If you have R15,000 in credit card debt, try not to add to it by using your card for unnecessary shopping. Focus on paying down the existing debt first.
9. Seek Professional Help
If your debt is overwhelming and you feel like you're in over your head, don’t hesitate to seek professional advice. Financial advisors, debt counsellors, and non-profit organizations can help you create a plan and negotiate with creditors.
How to Do It:
Contact a certified debt counsellor from the National Credit Regulator (NCR).
A professional can help you with debt consolidation, restructuring, or even debt settlement.
Example: A financial advisor can help you create a comprehensive plan to reduce your debt. This might involve negotiating with creditors, consolidating debt, or getting a lower interest rate.
10. Stay Motivated and Patient
Getting out of debt takes time and discipline. There will be setbacks, but it’s important to stay focused on your goals. Celebrate small wins and keep pushing forward.
How to Do It:
Set short-term and long-term goals (e.g., pay off credit card by next month, pay off car loan in a year).
Track your progress and adjust your plan as necessary.
Tip:
Every time you pay off a debt, use that as motivation to keep going. It may be slow at first, but with consistency, you’ll see results.
Take Control of Your Debt
Debt may seem like an impossible mountain to climb, but with these strategies, you can start managing it effectively. By understanding your debt, prioritizing high-interest loans, creating a repayment plan, and cutting unnecessary expenses, you can regain control of your finances. Remember, getting out of debt takes time and discipline, but with the right approach, you can become debt-free and achieve financial freedom.
Questions after the interview:
At the end of an interview there is usually an opportunity where you can ask any questions you might have. This is a great opportunity to show the interviewer that you are interested in the position as well as the company. It is a good idea to prepare a few questions before the interview – this can be done while you are doing research on the company.
Your questions should show the interviewer that you are a good candidate for the position. Try and avoid questions that are based on your personal needs and preferences, for instance:
- How much leave will I get in a year?
- Will I be considered for promotion in my first year?
- When will I get an increase?
- What time can I leave in the afternoon?
These questions are inappropriate at this stage and will probably raise concerns on the side of the interviewer. Should you be the successful candidate then all these questions will be answered in your letter of appointment so don’t waste this opportunity by asking these basic questions.
If the position is an entry level job or very junior then you are welcome to ask questions in line with the position, for instance:
- Why did the previous person leave the position?
- What would the successful person be tasked to do in a typical day?
- How does this position fit into the department and / or company?
- Could you explain the company structure to me?
- Is there any further education assistance or support?
If the position is more senior then you can prepare question around the following themes:
- current issues that will face the successful candidate;
- inter-personal challenges in the department;
- any process, technology or people challenges that needs to be attended to urgently;
- key result areas that need urgent attention in the first few months;
The above information should get you started. Prepare a few questions so that you can show your worth. Good luck with your interview!
