Is it raining debt? Get out of debt fast
There is a saying that goes: A bank is a place where they lend you an umbrella in fine weather, and ask for it back again when it starts to rain.
With today’s high living costs and fluctuating economy many of us are standing in the rain, umbrella-less.
Over the past few years, the average South African’s debt levels have skyrocketed. When asking ourselves what the reason for this increase in debt levels is, we cannot deny the role that our fast-paced and impulsive lifestyles play. It has become habit to swipe a card when doing transactions and before we realise it, we lose track of the state of our bank accounts and become entrapped in the debt cycle.
There is ultimately only one sure way to get out of debt, and that is steadily and with a plan. There are some simple and fast steps to follow to get out of your debt in the shortest time possible.
Get out of debt fast and permanently – follow these steps:
- Track, track, track! Keep track of your bank account and your spending (via your computer and phone). As mentioned, one of the main reasons for getting entrapped by the debt cycle is because it is too easy to swipe our cards for everything and lose track of how many money we have left.
- Use cash for everything. This relates to the above-mentioned point: keeping track of your account and finances. Stop using your cards for transactions. When working with cash, you will also likely get a better idea of the money you spend and you will be more cautious in spending large amount of money.
- Make cuts to your spending. This is an obvious one but possibly the most important. Draw up a budget and stick to it.
- Pay as much as you can afford to each month – the bare minimum won’t do if you need to get out of debt fast.
- Automate your payments. This way you cut out the risk of forgetting payments and incurring penalty fees and higher interest rates.
- Pay off debts with the highest interest rates first. You will save in annual fees this way and pay off your debts faster.
- Get rid of your retail credit cards. These cards have very high interest rates compared to those from major lenders.
- Use nonrecurring sources of income (also known as “unexpected money” or money that does not come from you primary income source) to pay off your debt.
- Freelance to earn extra money.
- Get financial counselling. Let the experts guide you through the debt relief process.
If you follow these guidelines you will be able to get out of debt fast. Aim to become more aware of your finances from now on to avoid making more debt. Remember, it will always rain, but make sure that you have your own umbrella!