Tips for minimising your debt

Many of us know that debt is bad. We know stories about debt because we have heard them — through firsthand accounts or tales of warning. We have also read ways to help avoid, reduce, or get out of debt. But how many of us are taking this seriously and working towards getting rid of debt. I don't care how many people sugar coat this truth. Debt is a burden. And we've become so accustomed to its weight that we don't even feel it sucking the life force out of us. The debt will weigh you down, and not just financially but emotionally too. You will constantly have that feeling of overwhelming hopelessness.

And when you owe money, you constantly live in fear — fear of missing a payment or never getting out from under, especially if you're someone with integrity. It's a hard life.

My mother who is already earning her pension has not had debt in a very long time. And when she does, she makes sure she pays it very quickly. And I know a whole lot of older women like her in my old neighbourhood. They are living off the little pension yet they are managing their finances so well. They don't have financial advisors or portfolio managers but they are managing. They have more than one savings societies and for burial societies they got you covered. If they want something, they save for it and buy it cash. They also manage to care about themselves and their grandkids and whoever is still living with them at home. Yet, people who are earning R50 000 are buying food on credit and chased by creditors every month. What kind of life is this?
"Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt." — Henrik Ibsen
Money is a tool but somehow along the way, it started dictating to us how to live our lives. And NO it's not that money can speak... is that we stopped telling it what to do and how to do it. We allowed everyone to tell us that if you have money, this is the life you deserve. We didn't consciously decide on that for ourselves. We fought to fit in this system. And we got burned but we didn't see it as a sign to STOP and LISTEN to ourselves... and then decide. Instead, we kept begging to belong. We forgot that we already belonged. We were already purposed and destined. We just needed to choose our path... our path of peace where we can play and be free. But we didn't learn and sadly, so many of us are still chasing that pitiful, sad life.

Money is no longer serving us, we are serving it. That's why we are called rats... and we are told we are running a race and mind you, we don't even mind anymore. We think, 'this is it'. And we are so convinced of our deception that if we are told the truth we mentally block it.
Tools are very handy in skillful hands, but in unskilled hands those same tools are dangerous.

In these times of economic uncertainty, it's even more important to put yourself in a solid financial position. One good way to do that is to dig out of debt.  Following are some tips on avoiding debts and staying out of trouble with creditors.

Take stock. Before you start reducing your debt, know where you stand. A lot of people will say they've got a certain amount of debt -- let's say R9,000,  -- when in reality, it's R14,000 or $17,000. You'll never hit your target if you don't know where it is, so be brutally honest with yourself.
Write down the debt -- and the interest rate -- on every debt you have. You will be shocked at how much money you really owe.

Set a budget. Whether it's in your diary, via an app or on a spreadsheet, you need to see where your money is going.  Setting up a budget is the only way to staying on top of your finances by making sure your money goes where you want it to. It's not about depriving yourself - it's about being in control. Make your budget realistic. If it isn't, you won't stick to it. Once your budget is set, you'll see how much money you have left over. Work out how much of this you can afford to put towards extra repayments to clear your debts. If you're not happy with how much is left over, check your budget to see whether there are some areas where you can cut back on spending.

Choose your payoff strategy. There are two common debt payoff strategies. The first thing is to pay all your extra cash into the highest-interest debt while paying the minimums on the others -- which is the fastest way, overall, to lower your debt. Once your biggest debt is paid off, you have even more extra cash and should apply it to the next-highest rate debt, and so on, creating a debt payoff snowball effect. A second strategy is to pay off your debt with the lowest balance first while continuing to pay the minimums on the others. Still, this is not the most cost-effective way to banish your debt, but it can be a psychological boost to eliminate a bill for good.

Avoid running up new debt. We are all constantly tempted to reward ourselves with a new vehicle, more upscale apartment or just more entertainment, trips or clothes. Slow down. Prioritise. And put debt repayment at the top of the list. Some delayed gratification now will allow you to reach your overall financial goals more quickly by minimizing your debt as efficiently and quickly as you can.

Stay in contact with your lender. Make sure you update any changes in your address or other contact information. If you have questions about repayment options or problems or inability to pay, contact these offices. Be proactive—don't wait for confusion or trouble to mount up.

Find your motivation and support. While knowing the best tactics to pay off your debt is important, it's also important to talk about the feelings associated with your debt. Surround yourself with people who won't judge you but people who treat you like a child. You need strong friends who will help you get your life back.

You are going to have to decide for yourself what you need money to do for you. Your choice is simple: embrace the hardship of getting rid of your debt and look forward to being free. Or, put it off and get poorer in every sense of the word for the rest of your life.