How to Manage Debt

How to Manage Debt

 We all want a better life and this is possible, if we can understand how to manage our money. Many South Africans are living beyond their means and changes must be made. Managing money is like a journey.  There may be dangers or difficult choices along the way.  We must therefore, learn to see the dangers and avoid mistakes that many of us make. 

If we want a better future then we need to save.  Saving does not make us rich overnight.  It takes time, commitment and determination.

Whether you are 16 years old, or 60 there are certain things that you can do to help you manage your life and your money better.  This is called money management and it starts with a budget.

A budget will differ from person to person. Some people may not even have a regular income.  Simply put, it is a plan on how you manage your money

There are certain essential things we need in life. These include water, shelter, food, education, transport etc.  These have to be budgeted for.  We must make sure that we have enough money to pay for these things every month. On the other hand, there are things that we would like to have, which we refer to as wants.  These include luxury foods and expensive designer clothes.  There is nothing wrong with buying wants, but only IF we can afford them.  Many people run into difficulties because they spend their money on their wants before they have paid for their needs.  Simply said – First pay for the things that you need and then buy the things that you want, IF you can afford it.

If after budgeting you realise that your costs are bigger than your income, then you are spending more money than you have.  This mean that you are in debt. 

1.  What can one do to get out of debt?


A few tips to get out of financial trouble:

  •       Face the problem:  If you get letters from people you owe money to open them.  Read them.  You must know where you stand with each creditor.
  •       If you have adult members who depend on your income, discuss the situation with them.  If your family wants you to get out of debt, then everyone must co-operate.  You must all agree on a way forward and stick to the plan.
  •       Draw up a budget:  Sit down and make a list of all your creditors and how much you owe them.  Make it your goal to pay off your creditors.  You can also phone or visit creditors and request that you be allowed to pay a smaller monthly amount for a short time.  But remember that the less you pay each month, the longer it will take to pay off the debt.  If the creditors agree, ask them to give you the agreement in writing.
  •       Living off what you have is the next step.  Unless your debts are paid off, don’t buy anything else on credit.  Avoid all unnecessary spending – it may be difficult but buy only what you need.

2.  Would the FSB encourage consumers to borrow money?

a)     We advise consumers not to borrow money unwisely as borrowing money does not always solve the problem. It can make it  

        worse because you will end up paying back the amount with interest and finance charges.  Hence the term, Cash is King!!

b)     Never borrow from one creditor to pay off another because different credit providers may charge different interest rates.  If you

        have to borrow, shop around for the best deal and do not borrow more than you need.  Only borrow if your budget shows that you

        can repay the loan.  Most importantly, only deal with licensed service providers.

c)      Try not to borrow from your retirement fund.  If you do, make sure that you pay the money back before you retire.  You will need

         it to provide for your old age.


Once you have taken steps towards managing your money, you will feel a whole lot better. Working out a plan that you can realistically stick to, will enable you to get out of debt and save for future endeavours.