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‘Drowning in debt’ has become an all too familiar reality for many people. They also believe that it is impossible to become debt-free. It can be done but it takes hard work, discipline and dedication.  

How to reduce debt and pay off credit quickly:


List All Your Debts and Draw Up A Budget

List every debt you have, including how much is outstanding, the interest rate you are paying and for what period you still have to pay that debt. Next, draw up a budget. Write down all your monthly expense look for opportunities to tighten your belt. Identify credit purchases and luxuries and eliminate them from your spending habits in order to cut costs. Stick to your budget and don’t be tempted to overspend.



Put A Dent in Your Debt

As your spending drops because of your budget, you will have free cash to pay off your debts. List your debts lowest total balance due to the highest due. You can now add the extra cash to the debt with the lowest balance, continuing each month before you move on to the next debt on your list. You can start by settling the debt with the highest interest rate on the outstanding balance. When you have paid off one debt use that debt’s monthly repayment and add it to the monthly repayment of the next debt. By doing this your monthly payment towards settling your next debt on the list will gradually increase. Keep track of each lender, including the amount owing and the monthly instalment and update this information every time you make payment. As you finish paying each debt, close the account and avoid being tempted to spend on credit again. Never fall behind on monthly payments and be realistic by setting attainable and achievable goals. You can also a bonus or thirteenth cheque to settle the debt or even your annual increase.


Make Room for Savings

When you are out of debt it is time to start saving. The interest charged on credit is almost always more than the interest you will earn on savings. So, if you are saving money while you are still in debt, you are in fact losing money. Take all your extra money and get out of debt first before you start saving. Getting rid of debt should be your priority.


Stay Debt Free, For Good

Getting debt-free is a gruelling process so make sure you don’t start the cycle over again. Rather save for something you want to buy and try to adopt a policy of going without something, rather than spending money you don’t have.