Money makes the world go round. This is one of the truths we’ve had to accept and live with from the moment we’re born right until our last days. We are faced with expenses from day one to ensure we are fed, clothed and sheltered. Having debt can heavily affect not just the salary you earn but also the lifestyle you want to live. It’s a “one step forward two steps back” obligation against your finances, especially if the debt is not managed well. At United African Stokvel, our goal is to help you take big leaps forward by building the right habits and helping you grow your money and savings. Here are smart ways to pay off your debt:
Use a Budget
Tackling your finances can be a daunting task. The best way forward is to create a budget detailing all your daily, weekly and monthly expenses against your actual income. Remember, you never want to spend more than you earn and a budget can help you see exactly where you stand financially. Knowing where you stand financially is the first step you must take to tackling debt. You have a better understanding of where you have extra funds you can use to pay off your debts.
Keep receipts on all expenses like groceries, rent, and travel. Use the list to see where you can cut back on spending then compare your debts against your expenses. Set goals for how much you want to save each month, and how much you want to put towards the debt. You can then use the budget to tackle your debt, with any extra cash saved from cutting back on your monthly spend.
Prioritise Debt First
There’s a popular saying that asks, “How do you eat an elephant?” The answer: “One bite at a time.” Tackling your debt can seem just as overwhelming as eating an entire elephant, but the proverb teaches us to reduce the elephant-sized task into smaller manageable chunks.
Arrange Debt by Cost
Organise your debts from the biggest to the lowest. Like the budget, it gives you a clearer road map of what your biggest expense is. Once you clear the bigger debt, use that same money and the freed-up cash from the paid debt, to pay off the rest.
Use Any Extra Funds
Use any extra funds you get to pay off debts. This could be money received from a stokvel, competition, family or even your 13th cheque. It may feel like you’re punishing yourself, but you’re in truth rewarding yourself by paying off the debt first.
Manage Financial Constraints
To be debt-free is to give yourself the freedom to choose how you want to spend your money, without obligations weighing you down. It’s your income as it is paying off necessary expenses and still have enough for emergency funds, pension funds, personal savings, investment options, or anything you want.
Manage/Cancel Store Credit
Stores will always try to leverage our sense of instant gratification by Find ways to pay off your credit/debt faster by paying double the amount or paying more than expected. You can then close your store account and start buying cash.
United African Stokvel is always looking for ways to help our members. This blog is intended to help our members think about their finances in a different way. This information is not intended to be a substitute for a financial advisor, you should consult with a financial advisor before relying on this information.