A recent report issued by Sanlam revealed that a shocking seventy percent of middle-class South Africans are feeling crippling financial pressure. According to the survey, the blame can be placed on the cost of education and university, a lack of emergency funds, family financial obligations, short-term debt and not having the money to save for the future.
These financial pressures can feel overwhelming for the most level-headed person, especially when the costs cannot be avoided. In a worst-case scenario, you get deeper and deeper into debt as you try to make ends meet. If you have a family emergency, the stakes get even higher. Here are some quick steps to help you ease the pressure before it’s too late.
Describe your end goal.
Whether you are a sportsman, individual or business owner, goals are powerful. It is much easier to achieve something if you have an end in sight! Think carefully about what you are looking to achieve beyond addressing debt – do you want to put together a nest egg to buy a home, or would you like to boost your retirement savings? Once you have this goal in place, you can write down the steps it will take to get there.
Make a list of your debts.
This is often the hardest part, as it is often a lot easier to stick your head in the sand. Create a spreadsheet of your debts, listing the debts with the highest interest rates first. Those with the highest interest rates will be the ones you pay off first.
Assess your spending.
Contrary to popular belief, paying off debt doesn’t require a miracle, it just requires discipline. If you examine your personal spending, you may be able to find small leaks in your spending. Maybe you buy lunch at the office more than you realise? Or perhaps you can cut down on your insurance or cellphone bill? Every cent you save adds up to a sum that can help you pay off your debt.
Create a realistic timeline.
Once you work out how much you can pay towards your debt each month, create a realistic timeframe in which to pay it off. This process will require discipline, and will be a lot easier if you have an end goal in sight!
Make the most of lump sums.
If you are lucky to receive a bonus, inheritance or another kind of cash windfall, pay as much of this as you can into your debt. While it may feel disconcerting at first, it will save you a great deal of stress by removing your monthly financial commitment. Another option is to use your windfall to pay off future personal expenses that often hit your finances hard, such as school fees.
Work with a financial planner.
A financial planner can help you achieve your goals quickly and easily. Working with an expert greatly increases your chances of success.