A Guide to Debt Free Life

Debt Restructuring - Debt Free

Living debt free is a goal that many people in South Africa and beyond aspire to. Whether it’s creeping credit card debt, mortgages, or personal loans, managing debt can become increasingly stressful and if left unchecked, it can snowball. Luckily, there are several proactive measures that you can take to successfully manage your debt and move towards a debt free life.

In this guide, our financial experts at Francois Uys Attorneys offer practical tips to help you reduce your debts and create a positive path towards a debt free life.

Understand Your Debts

 

To manage your debt, it’s important to understand it. The saying ‘knowledge is power’ springs to mind here, because understanding your debt can empower you to start working on it. The first step is to make a clear list of all of your debts. Factor in everything you owe, the monthly balance, and interest rates. This will give you a clear and tangible overview of what you need to reduce. Generally, you will want to pay off debts with higher interests levels first, such as credit cards.

 

Create a Clear Budget

 

Creating – and sticking to – a budget is one of the most effective ways to live debt free. Start by assessing all your expenses, including housing, food, direct debits, utilities, and transportation. The main goal is to understand how much you need each month and how much is left after covering all your essentials. The money left over is known as discretionary income and can be used to pay off debt.

The 50/30/20 rule can be useful here and looks like this:

  • 50% of income for essentials (rent, mortgage, groceries, and utilities)
  • 30% of income for non-essentials (such as entertainment or dining out)
  • 20% for debt repayment or savings

By allocating at least 20% of your income each month towards debt repayment, you will begin to see progress without sacrificing the essentials.

 

 

Consolidate Debt

 

If you have many debts, it might be worth consolidating them into a single loan. This may enable you to get lower interest rates and reduce subsequent costs. In some cases, consolidating debts can make monthly repayments easier to manage. This can be done in several ways, and it is best to discuss the process with a finance professional, as they will have the knowledge and expertise to guide you in making the right decision.

 

 

Increase Your Income

If debt feels overwhelming and it seems impossible to pay it back, it might be worth considering a side hustle. Whether you take on freelance clients, sell old goods online, walk dogs, rent out a spare room, or start waiting tables, there are many ways to increase your monthly earnings. Think about your unique skills and available time, and choose an option that will best help you manage your debts.

 

Seek Professional Advice

 

Sometimes debt feels to overwhelming and it feels impossible to manage it all. If the constant threat of creditors, pending court action, and letters of demand are getting too much, it might be time to consult a seasoned financial legal professional who can negotiate on your behalf. We will analyse your unique case and tailor a bespoke action plan that gets you back on track.

Reach Out to Our Debt Experts!

Our expert debt attorneys are here to guide you on a new path towards living a debt free life. If debt is taking a significant toll on your life and emotional wellbeing, our dedicated team are ready to step in and do the heavy lifting. With 33 years of experience and over 8000 successful cases (and counting), we can help you to regain your financial freedom. Learn more about our various services and contact us for a zero-obligation chat.