If you’re struggling with debt, you are one of many South Africans stuck in the money-trap. This year, consumer debt is at a whopping R1.7 trillion. This is only a little less than the debt of the government, which is currently over R2 trillion. 

This shows that debt is a major problem in the country and it is necessary for South Africa’s economy to find a solution to this issue – for both the nation and the citizens.

From your own personal position, deciding to get out of the debt trap might seem like a scary commitment, but it is one of the most life-changing decisions you could make and future-you will thank you for taking the step to find financial freedom!

What does it take to get debt out your life?

Escaping debt takes more than paying off outstanding payments. It means changing the entire way you go about managing your money: learning how to budget; knowing who you owe and how much you owe them; prioritising paying off debt; creating emergency funds, and knowing where to turn to when you need help.

In other words, you need to make decisions consistently to become debt-free and money-smart. It might sound like a difficult process, but with effort and expert-guidance, it’s possible!

Become debt-free with support from our expert counsellors! 

Here are a few mistakes that you may make and how you can avoid them in order to escape the trap:

  • Mistake: Not Getting Rid of Your Old Spending Habits
    People like forming habits in life. We often do things over and over again without even thinking about it, because it’s comfortable and is familiar to us. Think about when you are making breakfast on a regular morning, for example. The next time you go for your morning go-to meal, see how easily you do it without even thinking about it. This is because it is comfortable. If we let bad money habits sneak into our regular way of life, it can become expensive quickly. Eventually, it might cost you more than you can handle, leading to the debt trap.
    Solution: If you don’t do something about how you spend your money, you won’t ever escape the debt trap. Start small: have your coffee and breakfast at home; instead of spending money on your lunch, bring food from home. In the evening, avoid getting takeaways. Instead, spend the evening at home with a home-cooked affordable meal. When you watch what you spend, you will see a change in your daily habits.
  • Mistake: Trying to Make It out of The Trap on Your Own
    Many of us are not willing to ask our friends or family for help when drowning in debt. It might seem like a shameful, scary thing. This is not the case!
    Solution: Seek financial guidance and get free assistance from experts. Debtline provides services that help clients through their financial woes.

Get a free pre-assessment today!

  • Mistake: Trying to Pay off All Your Debts At Once
    If you have multiple debt payments, credit cards, home loans, student loans, and the like, it’s tempting to address these debts by paying each off every month. It seems like a good idea, but it’s actually a bad move.
    Solution: Look at your budget and limit your spending to only the essentials. Create a small amount that goes straight to the credit card with the highest interest rate. When this is paid off, move onto the next credit card. Continue with this process until you are debt-free. Or better yet, sign up for Debt Review and have us negotiate the repayment rates for you!
  • Mistake: Closing All Your Accounts Once They Have Been Paid off
    Solution: The solution is simple: pay off the account but do not close it. Believe it or not, your credit score is based on the amount of credit ready for your use. Having credit and not using it shows discipline and can improve your credit score.
  • Mistake: Not Making Your Debt a Priority
    We all have bills that need to be paid and debt traps to avoid, but not all of us prioritize this.
    Solution: Merge your debt and only make one payment per month. Another approach would be to take a piece of paper the size of one of your credit cards and make a record of the 5 debts you wish to get rid of. Tape that paper to the back of the card. Now every time you reach for it, you will be reminded that you are contributing to your debt, not subtracting from the debts on the page.

Once you’ve escaped from the debt trap, it’s important to avoid mistakes that could potentially place you back at step one.

Representative Example
Loan Repayments are full of variables and things such as rates and once-off initiation fees. These vary depending on your individual credit profile. The terms of the repayment period can range anywhere from three months to a maximum of 6 years, with varying Interest rates from creditor to creditor up to a maximum of 28% per annum (compounded monthly).

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