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6 Tips for Getting Out of Debt

Financial problems and debt have always been a common issue faced by most of us at some point in our lives. However, over the last 24 months, Covid-19 has only exacerbated the debt problem. With many South Africans losing their jobs or taking pay cuts, we are seeing a major increase in the number of people suffering from debt.

Here at Debt Movement, we understand that debt is difficult to deal with both financially and emotionally. It can sometimes feel like an isolating experience you want to keep secret, but it is essential to remember that nothing is embarrassing about financial difficulties. At Debt Movement, we understand that bad debt happens to good people, and that is where our expert advice and professional services can help lighten your burden.

As we start to see the beginning of the end of the coronavirus pandemic, now is the time to regain control of your financial future and follow our 6 tips for getting out of debt.

1. Write down Your Debts and Prioritise Them

The first step to tackling your debts is to make a note of all the money you currently owe. This can seem like a daunting task but believe us, facing your responsibilities head-on is the only way out of financial difficulties. It is also essential to write down all the money you currently owe so that you can keep track of it all and not miss your repayment periods.

Prioritise debts that need to be paid back first, once you have a record of them,  work out which ones you have a little more wiggle room with. 

Prioritising your debts doesn’t just mean paying back the largest amounts first. Instead, make sure that you keep up to date with important payments like your rent, mortgage or utility bills to ensure that you continue to have a roof over your head, water and electricity. 

Next, you should pay off the debts with the highest interest rates to not pay back way more than you have to.

2. Make a Budget or Spending Plan

It is important to know exactly how much money you have coming in and how much is going out. It is usually due to poor budgeting that many people find themselves in debt in the first place. 

Once you understand your finances, you can start making a budget or a spending plan. Look at your income and try to find ways to limit your spending. Is it possible to cut down on your phone bills or morning coffees? If so, this is a great place to start. After that, you can look around for cheaper alternatives to the services you already use. Many of us don’t even realise that we are paying more for our utilities or television plans than we need to be. 

Developing a smarter spending plan will leave you with more cash in your pocket at the end of the month.

3. Look for Extra Income

If you find that your regular income doesn’t cover your outgoings, it might be an excellent time to explore the option of gaining an extra income. 

You can do this in a couple of different ways. First of all, you can look to work more hours or pick up another job on the weekends. This could be a huge help for many people when getting out of debt, even if it is just a short term solution that could stop you from paying large amounts of interest.

4. Take Care of Your Mental Health

Although it may not be a tip for getting out of debt, it is of the utmost importance to remember to look after your mental health and emotional well-being if you’re suffering financial difficulties. 

It is common for people to feel a considerable amount of shame and isolation due to debt stress. Debt, however, is not something to feel embarrassed about. Make sure you get professional medical help if you find it too much to cope with, and continue making healthy choices, such as meeting up with friends and family and maintaining your exercise routine. Only when you are in a good place mentally will you be successful in getting out of debt.

5. Get Professional Help

It is always okay to ask for help. However, getting out of debt can be complex and sometimes, professional experience is required. Debt Movement can offer expertise, debt guidance and solutions to help you take back control of your financial future.

6. Consider Your Debt Solutions

Debt Review

Debt Review is a government legislated process that forms part of the National Credit Act 34 of 2005 (NCA) which was created to help and protect people who are struggling to meet their monthly debt repayments.

Under Debt Review, your debt counsellor will formulate a new affordable monthly repayment plan by taking into account all of your income and expenses. Your debt counsellor will then negotiate with your creditors to reduce your monthly repayments (in some cases by up to 50%). Your debt counsellor will aim to ensure that your interest rates, as well as your monthly repayments are reduced, helping you pay back your creditors and become financially free within a period of 60 months or less.

Debt Review enables you to manage your costs of living and regain your financial freedom. Read our blog explaining all of the benefits of Debt Review.

If you are struggling to pay your debts, Debt Movement is here to help you manage your debt. Request a free call back today and learn how to manage your money better.