This year has been difficult to say the least. Globally things have unfolded in surprising ways. Brexit shook foreign relationships between the United Kingdom and the rest of the world while Trump’s election has somewhat sullied America’s reputation as a global leader. In South Africa we’ve had a turbulent year too and currently we’re all struggling with the cost of necessities. For instance, fruit and vegetables were 18.7 percent more expensive in March 2016 than in March 2015. This means that we’re all trying to tighten our belts. Which might feel impossible during the festive season but starting the new year with a financial plan that diminishes debt is the best idea for all of us.
Knowing where to start can be difficult
Becoming debt free requires immense discipline. You have to look carefully at where you’re spending and cut back. You need to pay the most you can afford in to current debt and spend only the cash you have. To many people this feels impossible. Afterall, daily life is expensive. Just keeping a roof over your head is a challenge for many.
Find the best starting point and tackle it head on
Knowing which debt to work on first is difficult because altogether it appears too big a mountain to climb. But you must start somewhere. You need to list your debts and have a look carefully at which ones are costing you the most in interest. These are likely to be retail or clothing accounts. And, this is where you begin. Getting rid of debt that costs you in high interest is immediately going to save you money. And if you’re someone who makes use of the six month interest free accounts then make sure to read the fine print. It might not be as “interest-free” as you’d hoped. Watch out for administration fees and so on. Essentially, get rid of your retail accounts altogether. Stop your account immediately so that you can’t make use of them and make as many large payments as possible to clear any outstanding amounts.
Start saving even if you feel you can’t
It’s always advisable that you’re saving some money every month, even if it’s a small amount. Again, another seemingly impossible feat but it’s so necessary. If you’re not saving anything at the moment and can’t seem to find the cash to put away then make a commitment that once one of your debts are paid in full you take the additional cash and put it in an interest-bearing account. These savings you accumulate are essentially your emergency fund. And, emergencies happen, medical, home, car and so on. That’s life. Having the money to get yourself the help and assistance you need when something untoward occurs prevents you from getting into even more debt because of an unforeseen circumstance.
Create a strict but manageable budget
Once you have a handle on what you need to pay urgently, what accounts you need to close and you’re managing your long term commitments such as a bond or vehicle repayments you should create a new budget. A strict one that eliminates all unnecessary expenses. Create a budget that you can stick to. Even if you reach out to an accountant or financial expert to assist you, make sure that you create something that’ll see you out of all your bad debt as soon as possible. To assist you, download an app that’ll indicate exactly how you spend and where. This will take commitment too but if you log how you spend you’ll soon be able to see exactly where you’re wasting.
Learn the value of every cent
Because everything is so expensive some of us have forgotten the value of a rand. But every ten rand or 100 rand counts. Yes of course, 100 rand won’t get you very far nowadays but every 100 rand adds up and they shouldn’t be wasted. A good way to learn this lesson is to look around your house and start gathering things that you don’t use or need anymore and sell them. Private sales sites abound online. Social media platforms such as Facebook are being used for private sales too. Which means you’re dealing with a group of people who you can somewhat vett before making any monetary deals. This exercise will show you just how much money is lying around your home that can be used to pay off your existing debt and it’ll show you just how recklessly you’re spending.
Get an education
If you want to remain out of debt then stay informed. Make an effort to gain an education about money and what’s happening to it globally as well as locally. The latest financial news might read like Greek in the beginning but the more you read the more you’ll learn. Ask questions about everything and with the internet at your fingertips you can really find out everything. Get a handle of the financial situation in our country and then begin managing your money appropriately so that your financial future is safe and secure.