How to successfully get rid of debt and manage your credit
Firstly, remember that all debt isn’t bad. If you borrow money to start a side hustle, it’s not a bad investment. But, on the other hand, if you borrow money for things you don’t really need, like a new winter wardrobe, then make it your goal to pay off that debt as soon as possible. Don’t buy anything if you don’t have the funds for it. Credit costs a lot more than the amount on the tag in the long run.
Make it your goal to reduce your debt
Society can be materialistic and sometimes people get into debt to try
and look good. In the long run, it steals from your personal success
because you end up paying off interest, instead of investing.
We all have different ways to pay off debt, but often it’s a combination
of strategies to slowly chip away at your debt - and stick to that
strategy until the debt is gone.
It requires commitment, determination and persistence, but you’ll
thank yourself when you’re debt-free.
Here’s 5 tips to get you started
Stop using your credit card
It’s so exciting to use a credit card, but they usually tend to have the highest interest rate. Not so exciting when that outstanding balance never seems to get smaller.
Create and live within a budget
Cut out the ‘extras’ and things you don’t really need. Try living on as little as you can for as long as you can. Soon you’ll realise that you can do without those little extras.
Start a side hustle
We can all find time to make some extra money on the side. Don’t be tempted to spend that hard-earned extra cash on unnecessary luxuries; rather put it towards clearing your debt.
Pay more than the minimum amount
This will help get rid of the debt quicker, and you’ll save on paying high interest rates.
Try the debt snowball method
List all the debts you owe from smallest to biggest. Put any excess money into the smallest balance, while making the minimum payments on all your bigger debts. Once the smallest balance is paid off, start putting that extra money toward the next smallest debt until you pay that one off, and so on.
#AdviceForSuccess with Jeanette
Watch Momentum Metropolitan deputy CEO and CEO of Momentum Investments, Jeanette Marais as she gives knowledgeable advice on credit and paying off bad debt. Catch it on via DStv channel 147 at 19:30 every Monday.
Jeanette’s top tips on debt and credit
- If you understand interest, you’ll earn it in your investments. If you don’t understand it, you’ll pay it through your debt.
- The best way to deal with high interest debt is to identify it and get rid of it as soon as possible and make sure that you never enter into that debt again.
- Try to focus on good form of debt, like buying a house or investing in your education.
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