Despite easing inflation, many South African households are still struggling with the increasing cost of essentials like food, transport and electricity.
According to the 2024 PPS Women in Wealth Survey, 35% of affluent and aspiring affluent women especially those who are often the heads of their households see economic instability as a key financial concern.
Therefore, effective debt management is essential and through strategies like budgeting, debt consolidation and professional advice, people can gain control over their debt, reduce credit reliance and build a more resilient financial foundation.
Here are practical debt management tips to improve your financial stability.
Go beyond the minimum
Only making the minimum payments on your debt may seem manageable, but it only prolongs debt and increases the amount of interest paid, according to Rynhardt de Lange, Director and Head of Legal, Milaw Legal.
By paying more than the minimum, you can accelerate your debt reduction and save significantly on interest.
“By paying more than the minimum, you are not only reducing your debt faster but also cutting down on the total interest you will owe,” PPS said.
You need to think of it like this, every extra rand you put towards your debt is a rand saved from being lost to interest.
To free up some extra cash, you should consider cutting down on a few non-essential expenses like that daily coffee or a takeaway lunch.
Target high-interest debt first
High-interest debt is like a financial black hole that will quickly draining your financial resources.
The survey showed that a large number of affluent women (25%) prioritise paying off their high-interest debt as a primary long-term financial goal.
Focusing your extra payments on high-interest debt will not only saves you the most in interest but also eliminate your debt faster.
If you have a smaller balance that you can pay off quickly, tackling that debt first might give you a sense of accomplishment.
Look for better rates
PPS said that a quick online search or a chat with your bank could help you find credit cards with much lower interest rates than what you are currently paying.
According to the survey, 88% of women reported using credit cards, therefore it is essential that they look for better rates.
PPS said: “Switching to a lower-rate card could save you significant money each year money that you can then use to chip away at your debt even faster. It is like finding a discount on your financial obligations.”
Balance transfers
Balance transfers can be a smart move to consolidate and cut down the interest on your debt but it is crucial that you are cautious of potential pitfalls, according to PPS.
PPS said that you should always check for transfer fees and know how long the promotional interest rate lasts, if the rate has a large jump after a short period, the transfer might not be as beneficial as it seems.
Make sure to crunch the numbers before making the switch.
Do not be afraid to negotiate
If you are struggling to keep up with your payments, you should not avoid your creditors. Instead, take the initiative to contact them and negotiate.
“Many companies are willing to work with you on lowering your interest rate or adjusting your payment schedule. A little negotiation can go a long way, giving you more room to breathe and a clearer path to becoming debt-free,” PPS said.
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