9 Mistakes To Avoid When Getting Rid of Debt
For many South Africans, the two-pot retirement system has become a go-to solution for paying off short-term debt and covering expenses like homes and cars. But while fewer people than expected have dipped into their retirement savings, it’s still a cause for concern.
Read: Three Ways To Tackle Credit Card Debt
What’s worrying is that those who have taken the plunge are mostly aged between 35 and 45 – an age when retirement should be on the radar, not an afterthought! It’s now more important than ever for South Africans to prioritise their savings and shift away from spending recklessly. But when you’re eager to get rid of debt and start saving, it’s easy to rush in and make mistakes that could set you back.
Here are some common mistakes to avoid when tackling debt:
- Don’t Add More Debt
When you’re under financial pressure, it might seem like a quick fix to take on new debt. But this only adds fuel to the fire! Instead of adding more repayments and interest, focus on paying off what you already owe.
Read: 7 Types of Debt in South Africa and How To Manage It
Avoid the temptation of dipping into more loans or credit cards—it might feel like a relief now, but it’s a trap that’ll only catch up with you later.
- Budget Like a Pro
Let’s face it: Budgeting isn’t anyone’s favourite pastime! But if you’re serious about kicking debt to the curb, you’ve got to take it seriously. Yes, the recent dip in petrol prices may seem like a great opportunity to loosen your belt a bit, but resist the urge! That extra cash should be going towards your debts. Make a budget, stick to it, and keep your eyes on the prize—freedom from debt!
- Don’t Stick to the Minimum Debt Payment
Paying the minimum amount on your debts might feel manageable, but it’s a long game that costs you more in the end. The longer it takes to clear the debt, the more interest you pay, and that’s not the kind of gift you want to give yourself! Whenever possible, pay more than the minimum to speed up the process and reduce the overall cost of your debt.
- Tackle High-Interest Debt First
Got a stack of debts? Prioritise the ones with high interest – like credit cards or payday loans. These types of debt are expensive over time, so clearing them first will free up more of your income and give you breathing room for your other financial obligations. The faster you deal with these, the less interest you’ll end up paying overall.
- Build an Emergency Fund
We get it – when you’re focused on paying off debt, an emergency fund might feel like a luxury you can’t afford right now. But it’s exactly because life throws curveballs that you need one!
Read: Prescribed Debt – A Complete Guide
An emergency fund is your safety net for unexpected expenses, like sudden medical bills or car repairs, that could otherwise push you back into debt. Even if it’s just R100 a month, start putting something away – it could make all the difference in an emergency.
- Educate Yourself on Finances
Debt doesn’t just happen because we overspend – it’s often linked to not fully understanding how to manage money effectively. Improving your financial literacy can help you make smarter decisions about spending, saving, and investing. The more you know, the better equipped you’ll be to avoid falling back into debt once you’re out of it.
- Celebrate Small Wins
Let’s not forget to celebrate! Repaying debt can feel like a marathon, but every little step counts. Instead of just looking forward to the day you’re completely debt-free, celebrate the small milestones along the way.
Each debt you clear, each extra payment you make – these are victories worth recognising. Rewarding yourself in small, meaningful ways will keep you motivated and reinforce positive progress.
- Don’t Be Unrealistic
Some people try to rush the process, throwing every spare cent at their debt in the hopes of wiping it out quickly. But this can lead to burnout or, worse, having to take on more debt to cover basic expenses.
Read: Over-indebted – How Does It Affect You?
Be realistic about what you can achieve and focus on paying off one debt at a time. Start small and build momentum – it’s a marathon, not a sprint!
- Swallow Your Pride
Pride can be a major stumbling block when it comes to tackling debt. Many people feel they need to face it alone, but you don’t have to. Whether it’s turning to a loved one for support or seeking advice from a professional, it’s important to realise that asking for help isn’t a sign of weakness. In fact, it can be the smartest move you make.
Tackle Debt with Debtline
At some point, you might feel like you’re stuck in a cycle, spinning your wheels and not making progress. That’s when it’s time to get serious about breaking free. Debtline’s NCR-registered counsellors are here to help you navigate the debt review process and provide the guidance you need to regain control of your finances. You’ll also benefit from legal protection as you move through the process. All you need to do is fill in the Contact Form, and the team will give you a free callback to discuss your options.
Debtline’s NCR-registered counsellors are here to help you navigate the debt review process and provide the guidance you need to regain control of your finances. You’ll also benefit from legal protection as you move through the process. All you need to do is fill in the Contact Form, and the team will give you a free callback to discuss your options.
