Working towards debt-free living
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 The key to ultimately living a debt- (and worry-) free existence is to live within your means. The fastest way to achieve this ideal is to begin by living below your means so as to free up your income to start paying your way back to a debt-free life.
But where to start? you might ask. The first thing to do is to stop coveting what your neighbours have. By this I mean: stop trying to keep up with the Joneses; be they your physical neighbours, your closest friends or members of your family. It is important to remember that there will always be people who have more than you do. More spending money, more shiny toys (quads, boats etc). It is impossible to keep up with them, and not really worth the stress of even trying. Leave them to their flashy cars, designer clothes and huge houses. It is time for you to concentrate on your own situation, and how you are going to improve your own lot.
So, how do you go about spending less money? Start with the small day-to-day things: buy your milk in sachets instead of in a plastic bottle (this can save you as much as R2.80 if you are using 2L per day, which is more than R80 per month), eat less take-away meals, skip your coffee shop visits and invite friends over for a freshly-brewed cup in the comfort of your lounge. Then start to look at the medium-sized luxuries with which you surround your self: DSTV (unless of course you really can’t live without it), that gym membership you never quite get to use, playing golf at the most expensive course in the city. I am sure if you evaluate your particular circumstances you will be able find a number of areas where you could make compromises that will ultimately benefit you and lead you to that debt-free existence that is attainable, and sustainable too.
Okay, so now you know where you can save. You now need to channel that freed-up income towards paying off debt. A good place to begin is with your credit card, as this form of debt attracts a very high interest rate. Begin by paying any extra amount that you can over and above your minimum-due amount, even if it is only R100 extra. Then build that up to an extra R200, and continue like this until you have settled that debt. The next debt to look at repaying as quickly and efficiently as you can is your car loan, student loan, and of course – the big one – the home loan. By paying any extra amount that you can you will be saving thousands of R’s in interest charges over the full loan term. If you suddenly find yourself flush after SARS has given you a refund or you got a performance or annual bonus at work, rather than spending it madly, use it cautiously (remember that this is the new you – working towards a debt-free life).
The last and final point to remember is that if you can’t afford it you probably don’t need it. If you want it badly enough it should be worth saving for. It is always better to have money in the bank than to have the bank chasing after you for money that you owe them. Financial peace of mind is priceless. |
Debt Blog 