Often it starts with a credit card. We slap things on the plastic because it’s easy and we want it now! No matter whether you consider yourself lower class, middle class or upper class, we all tend to spend beyond our means and fall into the clutches of debt far too often.

So if you’ve gotten to the place where you’re telling yourself “I need to get out of debt now”, here’s a little advice on how to apply a debt recovery plan.


The Key – Reduce Your Repayment Interest Percentage Rates.


It’s a really simple solution to what may seem like a complicated debt problem. You need to consolidate all your debt into one low interest payment loan. So student loans, credit card payments and any other regular payments you have to make will all be rolled into one.

Do some research at the banks. Find a loan plan that offers you a very low Annual Percentage Rate and apply for that loan. Even if your not currently banking with a particular bank, open an account and apply. Even 0.5% or 1% lower APR can make a big difference on large amounts so make sure you apply for the lowest APR loan you can get.

Now use that loan to pay off your credit card, student loan and other expenses and DON’T be tempted to take some of the money to buy something else you’ve seen in the shops, in a magazine or on television. Discipline yourself here, your aim is to get out of debt, not in even deeper. Now that those bills have been eliminated you’ll just be left with the loan repayment. It might seem like your spending a lifetime on paying it off but keep reminding yourself that you’re losing less money to the interest now.

Another thing you can do is increase the monthly payments if you get a promotion or salary increase. Increasing your monthly payments will obviously get the loan paid off much quicker and before too long you will be out of debt and able to buy thing’s in the sensible way just like our Mum’s advised us, save up for it.

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1. Stop smoking. Smoking a pack a day? In South Africa, that’s easily R16 – R20 a day, or about R7,300 a year, you can put that straight into your saving’s account and not to mention what you’re going to save on medical bills if your health’s deteriorating badly because of your habit.
2. Stay at home. Entertainment spending can quickly eat through the best-planned budgets. Consider going to your local library for movies, music and of course books. Don’t eat out as much. Have a crack at cutting your spending in both these area’s and I guarantee a few extra thousand bucks in the bank after a year or so.
3. Cut your credit cards up. Before you do this, build up an emergency fund to help with most unexpected expenses. Credit card’s are obviously useful but paying the minimum amounts will only keep you in debt for years. I’m not one for too many statistics and figures but if you just wait till you’ve saved enough money to buy what it is you want then you can eliminate your interest payments completely.
4. Hold the mother of all garage sales. Check all your cupboards, the garage etc and pull out all the stuff you don’t use. If you haven’t used it in six months, there’s a good chance you don’t need it. There’s a lot of hidden costs in too much stuff and you may be able to hold a mother of a garage sale to rake in some decent extra money. If you don’t have a garage, use a friends!
5. Cut down on your driving. This one’s not possible for everyone but a real money saver if you can do it. Car-pooling, public transport, it’s all going to save you money on petrol, and maintenance costs. If you live in the city, consider taking a drastic approach and get rid of your car if you can. Get yourself a bicycle, take the bus, the train or invest in a cool skateboard…. LOL.

If you’re really ambitious and follow all the 5 money saving tips above then you’re looking at quite a large sum of money saved over the next year or so.

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It can be really hard saving money in your bank if your accounts are linked, credit card account to cheque account, current account to savings account… Whatever.

This makes it very easy to transfer money between accounts through online banking, telephone banking or at the ATM machines.
My advice is to open a new account at a completely different bank. Make it a bank that’s a pain in the ass to get to, somewhere on the other side of the city or town where you live. The more inconvenient it is to get to the better.

Open a new savings account at your new “shit load of hassle to get to” bank, but, and here’s the important bit, no ATM card, no online access, no telephone banking, no nothing!!

You must only be able to withdraw money from this bank account by having to go there in person. Set up a weekly or monthly debit order from your usual account with the amount you want to save on a regular basis and don’t change it, until you want to increase the amount.

From then on, the only money you’ll see in your usual account will be minus your savings and if you’re tempted to get your grubby little paws on your savings then it’s going to require a special trip.

I realize this money saving idea won’t work for everyone but I think it will come in handy for some as it makes you think a bit more first before going through the hassle of trudging off to your “shit load of hassle to get to” bank and gives you a bit more self discipline, if you need it.

Well, I’m off to open a new EPlan savings account on Robben Island.

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If you find yourself in tight financial circumstances quite often, then you may want to look at a bank that offers something like a payday loan or a cash advance. These banks can be helpful if you find yourself making late payments on loans or credit cards. They will often help you out of a tight financial situation and help you to avoid late fees and judgments on your credit profile. Make sure you are aware of the terms and conditions and try to make all of your payments on time. It is also important and advisable to make more than the minimum payment required whenever possible to avoid having bad information put on your credit profile.

If you qualify, then overdraft protection is useful to have on a current account. Overdraft protection is normally a line of credit extended to you that can cover bounced checks or overdraws on your account. Overdraft protection gives you the opportunity to draw more money out of an ATM than you actually have in your account. This can be helpful if you are in need, but be careful not to abuse this type of privilege. Even with overdraft protection, you can be penalized with substantial fees every time you delve into your overdraft account.

With some banks the charges go directly on to a credit card. This may seem advantageous, but each overdraft generally comes with a fee and shows up as a cash advance on your credit card. Cash advances from a credit card account aren’t usually calculated at the same yearly percentage rate as a regular purchase. Cash advances from your credit card are more often than not at the highest interest rate available to the credit card company. Keep a close eye on your account. If you know that you are getting very close to emptying your current account, it might be a good idea to use your credit card if possible. This way, you’re only charged the regular Annual Percentage Rate with no extra fees. This can save you from getting deeper in debt than you can handle.

Savings accounts are really useful ways to save money (probably not Rocket Science)! It actually helps your credit rating to have both a current and a savings account. Savings accounts often have stricter guidelines on how often you can withdraw money than current accounts do. This can be beneficial if you are serious about saving. A savings account can also be used as an overdraft account and often without the fees associated with the first few overdraft withdrawals. Be cautious not to deplete your savings and do your best to have regular amounts of money going into savings at set intervals, even if it’s not that much money. A wise option is to have an automatic debit order from your current to your savings account happen on the same day that your salary goes into the bank. This way you don’t ever see the money available in your current account and you don’t make it an option not to save.

The 4 Major South African Banks are:

• Standard Bank
• Absa Bank
• Nedbank
• First National Bank

Have a good look online and visit the banks in your area that are convenient to you.

You’re sure to find a bank that suits your needs and your lifestyle.

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