What can you do to get out of debt?

Countless South Africans are not only finding it difficult to make ends meet, some are finding it near impossible and opt to buy necessities such as food on credit.

TransUnion South Africa’s Industry Insights Report showed that consumers’ credit card balances, bank and non-bank personal loans and smaller ticket purchases grew significantly, with more and more credit cards and personal loans also being taken out.

“These increased borrowing levels are likely to be driven by current challenging economic conditions, with consumers relying on credit to supplement their incomes to meet their day-to-day financial obligations,” read the report.

TransUnion director of research and consulting, Carmen Williams said it was clear that many South Africans were struggling to get by.

In the third quarter of 2019, 7.1 million accounts under ‘bank personal loan balances’ – used by consumers to help fund day-to-day expenses – measured a total outstanding balance of R257 billion, with an average outstanding balance of R36 031 per consumer.

With these startling figures, it is clear that more and more people could be falling into a debt trap.

What options are available to help consumers get rid of debt?

Sathasivan Moodley of Reed and Stanley Debt Counsellors said it could be as simple as tackling your debts one at a time.

Viewing all of your debts as one can be intimidating and make repaying it seem impossible.

“The first thing you need to do is acknowledge that you are in debt and then calculate how much debt you have,” said Moodley.

Then divide your debt into manageable amounts and see where you can allocate extra funds in order to pay it off faster and, once the first debt has been paid off, decide which you will prioritise next.

Tracking and controlling your expenses, assessing unnecessary regular spending patterns and cutting out non-essential expenses such as cigarettes will aid greatly in paying off debt.

Keeping a close eye on water and electricity bills will also help you determine how you can save on these.

Keep track of your expenses by collecting till slips – doing so will help you identify non-essentials such as take-out lunches as opposed to packing leftovers.

“Budgeting should take priority and, a simple way of doing this is by setting specific amounts aside for groceries, fuel and other essentials. Pay these using cash as opposed to swiping your card, as this will help you keep track of your limited cash expenses. The money left in your account should go toward paying off your debt,” said Moodley.

Doing all of this will see spare funds become available however, do not be tempted to use this for tempting purchases.

Instead, move these funds into a savings account – this will help you plan for unforeseeable expenses while you continue to pay off your debts.

“All these steps may not seem like they will have a huge impact, but given the time, your debt will decrease and you will have more funds to spend on essentials,” said Moodley.

If you follow this advice diligently and still find yourself unable to meet your commitments to your credit providers, and more especially if your are three months in arrears, Moodley advised you seek the help of a debt counsellor.

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