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Home » Reduce short term debt with these 5 tips

Reduce short term debt with these 5 tips

 In Articles, Short Term Loans

Becoming debt-free is one of the most crucial steps towards a healthy financial future. We cannot plan for retirement, save for a house or investment properly if we have short-term debt. Yet, for most of us, becoming debt-free very difficult. South African’s are among the world’s biggest borrowers as the cost of living increases and the economy weakens. Around a quarter of South Africans say they find it easy to save money each month, with the majority of us owing most our paycheck to creditors. Yet, there are things we can do to help. Friendly Finance has put together some tips to begin the path toward a debt-free life.

1. Evaluate your debt and prioritise

You’re not alone if you have multiple lines of debt. Credit card and personal repayments are just a few bills the average South African will owe each month. To reduce your debt more effectively, you should prioritise repaying the short term that is costing you the most. This is usually the debt with the highest interest rate as the monthly cost of borrowing is bigger. For example, owing R10 000 on a credit card with 20% interest is costlier than a personal loan debt of R9 000 at a 10% interest rate. Repay as much as possible each month (without overextending your finances) to reduce the debt as quickly as possible.

Do not ignore your other debts though – you should still make the minimum repayments each month as a missed payment will be costly.

2. Review your outgoings and adjust

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