Debt Help in South Africa: Debt Assistance in South Africa without debt review and it’s negative effects
Contents:
Rethink your life
Rethink your life and make a plan on how to get out of debt. This can be done in 4 easy steps:
Start by making a list of all your debts.
After this is done you can work on your budget according to your income.
Make a plan to pay off your debts, starting with the smallest amount first.
You can cut down on unnecessary expenses and follow your budget.
Live within your means
The most important step to avoid the negative effect of debt consolidation is not to get yourself into debt in the first place. This may seem obvious, but this is not something you can say about most people in South Africa today. The truth is, most people have to go into debt because they spend more than they earn, and this leads them into a vicious cycle of never-ending debt.
To live within your means, you need to make sure that you do not spend more than your income. To do this:
- Spend less on unnecessary expenses like eating out, buying coffee, going to the movies etc.
- Spend money on experiences rather than things. You want to buy happiness? Then buy experiences like a trip or an activity with friends or family rather than material things such as clothing or electronics.
- Shop for cheaper food and clothes instead of expensive brands which cost more with little benefit to you.
- Make your own coffee instead of buying it from coffee shops which will save you hundreds per month.
Pay off debt strategically
When you’re paying off debt, it can be helpful to have a plan. After all, if you take the time to calculate your budget and do some introspection about where you want your money to go, why not put that same energy into determining how exactly you want to pay down your debt? It’s not something most people think about when they begin a debt payoff plan, but there is no one right way—which is why it’s great that there are multiple options. But which method should you choose?
As I mentioned earlier, there are four major strategies for paying off debt:
- Paying the highest interest rate first
- Paying the lowest balance first
- Paying the largest amount owed first (you’ll be putting more of your monthly payment toward principal)
- Paying extra on everything
Improve your credit score
How to improve your credit score:
- Get a free copy of your credit report. Look for errors and correct them.
- Pay bills on time. It’s critical to pay bills on time, every time. Late payments are the most common reason for negative marks on your credit report, and can do significant damage. Even if you miss just one payment, it’s likely to appear on your credit report and stay there for at least seven years—possibly longer depending on the type of account that was missed.
- Keep old accounts open, especially ones with a positive history of use and payment. The longer you’ve had an account open and active, the better it is for your overall score (as long as you’re paying off what you owe). If your new car loan has helped lower all of your scores (because it opens up a new line of credit), try not to close out any older accounts that have good use/payment histories attached to them as this will hurt even more than opening up the new account in the first place did originally (because it lowers your average age of accounts). Don’t close out old accounts that still have available balances or zero balance; keep these open because they help bolster how long you’ve been using credit in general. Never close out an account with no balance unless it’s necessary because this could negatively impact your credit score by lowering another factor called “credit mix”.
- Use credit wisely:
- Keep balances low – About 30 percent or less is ideal – but keep in mind that using too little can also hurt scores since some scoring systems consider having no balance a sign that you don’t need any more credit! If too much debt is being shown via bank statements then address this by switching providers – banks don’t care about keeping their customers safe from debt so they will happily make decisions based on their own financial gain rather than yours anyway!
- Avoid opening too many new accounts at
Pay off debt and Live Debt Free without Debt Review
After relaying the basics of how to pay off a debt, I mentioned that paying off the smallest debts first and the highest interest debts first is generally the best strategy. The reason for this is that we all get into debt in different ways, and within a single experience we may find ourselves with several different debts—from medical bills to credit card bills to car loans to mortgages. It’s important not to create too many distractions when you’re working on paying off debt. If you’re trying to pay off some debts while at the same time making payments on others, it’s very likely you’ll miss your mortgage payment or interest because of a broken-down vehicle or some other temporary obstacle.
Much like investing money in the stock market based on which stocks have been performing best over the years, it’s wise to go with what you know works best now. You’ll be ableto achieve your goal faster if you focus on paying off your smallest debts first and then work up from there (rather than doing things backwards).
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