A step-by-step strategy for becoming debt-free

If you are currently feeling pressure as a result of monthly debt repayments, you are definitely not alone. Small, consistent changes can help you take control and speed up your repayment progress.

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Step-by-step strategy


  1. Know what you owe 
    List all of your loan accounts. Include their balances, interest rates, and the minimum monthly repayment for each account. 
  2. Find a little extra in your budget
    Use your bank statements and receipts to analyse where and how you spend your money each month. Most of us will find areas of waste or unconscious spending that can be reduced. 

    Tip: Here’s how to reduce your spending on essential expenses. 

  3. Be specific and realistic 
    Now that you’ve reduced your spending, be specific and realistic about the amount you can afford to add to your repayments each month. Even if it seems small, plan this amount into your budget and stick to it.
  4. Snowball or stack
    Keep paying all of your minimum monthly repayments. Use the extra amount you’ve identified to increase the payments on one account. Start with the account with the highest interest rate (stack method) or the account with the lowest balance (snowball method).

    Keep doing this until you repay the account. You’ll now have extra money in your budget. Add this full amount to your repayment on the next account.  Your progress will speed up with each account you pay off. 

    Tip: Once you’ve repaid a debt, close the account to save yourself the monthly fees.

  5. Pay yourself first 
    Whether by stop order, debit order or transfer, make your additional repayment the day you get paid. This way you prioritise yourself and avoid accidentally or impulsively spending this money on something else. Keep doing this until all your accounts are paid off, then keep the habit up and add the money in your budget to your savings goals!


Smallest balance first

Here’s how to tackle R36 000 of debt using the snowball method – the smallest balance first approach. 

Let’s assume you have the following 4 outstanding credit balances:

Total owed: R36 000
Using the snowball method, you would make the minimum payment on all of your accounts. To one you would add the extra money you’ve identified through reviewing your money plan. In this case, let’s say you’ve found an extra R500.

Using R500 extra a month, here’s how to pay off all your debt in 16 months, instead of 31 months.

A step-by-step strategy for becoming debt-free

Once all your debt is repaid, you have a significant amount extra in your budget to put towards saving each month.

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