Take Action Today

Newsletter   •   Quarter 2   •   2022

TAKE ACTION today

1
Increase your cash flow
Begin by taking stock of where your money is going.
  • Jot down all your expenses, from your bond, your cups of coffee to your debit orders.
  • Record every rand you spend in a month, so you can see just where your money is going.
  • Decide where you can cut costs.
  • Use the money you save to pay off your debts.
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2
Commit windfalls to debt

When you get a tax refund or work bonus, add the money to your loans instead of saving it in your bank account or splurging on yourself. No matter how tempting it is to spend it, put the money towards your debts.

Other unexpected windfalls, like inheritances or cash gifts, can also be used to pay off debts faster. Remember, every little bit helps when working towards your debt-payoff goals.

3
Sell unnecessary possessions
Take stock of all your possessions. If you can do without something, sell it and inject the money into your debt reduction plan. Selling items you no longer use or need is a great way to get some extra cash that you normally wouldn't have.
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4
Pay more than the minimum payment
See how much money you have available and decide how much extra you can put towards your debt. Every rand counts.
Paying more than the minimum payment will save you money in interest and help you get out of debt faster.
5
Target your smallest debt first

Typically, your smaller debts have higher interest rates than larger ones, so it's a great idea to pay off your smaller debts first.

With this method, make the minimum payment on all your debts except for your smallest debt. For your smallest debt, pay as much as you can afford.

  • Once you have paid off one smaller debt, use that repayment money to pay off your next debt.
  • Repeat this process for your next smallest debt.
  • Each time you settle an account, the money you have available to pay off your debts will get larger.
  • Before you know it, you will be settling your largest debts.
6
Pay off your mortgage quicker

Your mortgage is often the largest debt that you will have. Interest on your home loan is calculated daily on the outstanding balance.

Instead of spending your money on paying interest, you can save it for your retirement. Put every spare rand into your mortgage account.

Any extra money you can pay into your mortgage will lower the overall interest you will pay. Not only will you save money, you will also settle your mortgage earlier, which means you will have less debt.

7
Consolidate your debts

This involves using an existing credit facility or a new loan to consolidate all your smaller debts into a single, larger debt.

A popular method is to use your home loan. Many banks offer consolidation loans, whereby the bank will repay your many creditors and take on your debt in a single package.

  • The consolidated loan is likely to have a lower interest rate than your smaller debts. However, you may now be converting short-term debt into longer-term debt (much longer in the case of a home loan), which means you may end up paying more in interest.
  • You will deal with one provider, instead of many.
  • You will need a good credit record and the credit provider must regard you as a low-risk borrower.
  • Homeowners be wary – the last thing you want is to fall behind on your repayments and lose your home.

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