TX Nefario - шаблон joomla Форекс
Monday, 07 November 2016 00:00

Debt (Part 2 of 2) – Reduce debt in a few easy steps

Welcome to part 2 of the second blog edition of my 3 part Blog Series, 1-2-3 of Finance. Today we will be looking at how to reduce debt. South African’s are heavy indebted with 77 % of the population running out of money before the next pay day.


Debt can become overwhelming. To win the war on debt we need to start by writing it all down.This will ensure that you remember all your commitments and can account for them in your monthly budget. If you are unsure on how to set up your monthly budget then just click here.



Tackling debt often requires drastic measures, one such measure is to cut up your clothing account cards and credit cards and show it off to family and friends.


This will stop you from being able to spend more credit and sharing it with your friends and family will keep you accountable.


With a budget in place, and following the plan you will find a few extra rands to start the debt reduction process. After writing down your debt on the Debt Schedule it will be easy to spot the debt with the highest interest rate. We will attack this debt first and use the extra money to pay towards this debt each month. Even an R50 extra will have a huge impact.

For example, an R2000.00 Personal Loan at 10.5% interest over 36 months with an additional R50 repayment per month will shorten the loan term to only 28 months. An additional R100.00 payment per month will shorten the Personal Loan term to 23 months repayment period.


Once we have the 1st debt paid off we then use the money we were paying towards that debt and we add that to the instalment of the second highest interest debt account. For example, let’s assume that the Credit Card has been settled and the second highest account is the Personal Loan. You will pay the credit card surplus together with the loan instalment into the Personal Loan Account thereby decreasing the repayment of it.


When this debt is paid off you take both these debt instalments and continue paying off the third debt account. The process will take time in the beginning but over time it will begin to snowball, and you will quickly pay off all outstanding debt. Continuing with this practice will enable you to settle all your accounts sooner.


After all your debt has been paid off, you will see how much extra money is available each month so it is easier to buy with cash. Look at your current accumulated debt instalments, what if you had all that extra money each month. Would you be in a good position? Consider the cost of debt before you enter into it.


If you have a story on how debt has affected you or how you got out of debt I would love to hear from you. Please drop a comment in the comments section below.


Author Ben Charlton

Edited by N Du Preez (Business Internet Marketing Solutions)

Ben Charlton

A financial planner can be someone who sees you as a number; they sell you the product that works best for them, they do exactly what you ask for, no more and no less. We are not like that, to us, our job is not to sell you a product, it’s to help you realise your dreams.



Leave a comment

Make sure you enter the (*) required information where indicated. HTML code is not allowed.