Being debt free to start with means having minimal to no bad debts and average good debts. Being debt free doesn’t mean you have no mortgage, bills, or car payment.
What to do if struggling with debt?
If you cannot pay off your debt
You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell. If you cannot pay off your debts, you can be made bankrupt.
Can I get my debt written off?
Most creditors are able to consider writing off their debt when they are convinced that your situation means that pursuing the debt is unlikely to be successful, especially if the amount is small.
What is it like to be debt free?
In short, when you become debt free, you will experience freedom and relief in your financial life. You will know what it’s like to make money and keep it. You will build savings with ease, and accomplish financial goals quicker than ever.
Below are steps to Become Debt Free South Africa
Bump up your debt repayment percentage
Putting at least 15 percent of your paycheck or income from Social Security or pensions toward credit card debt and loans will help you pay down those obligations much more quickly because most credit card companies only ask you to pay about 2 percent of the outstanding balance each month.
Use savings to pay down larger debts
Don’t be afraid to use a portion of your savings to pay down high-interest rate debts. Using cash reserves for debt repayment is a smart decision because you will stop accruing interest on those large balances.
Negotiate for a lower interest rate
Call your creditors to negotiate a lower interest rate. You’ll be surprised how many creditors will be willing to reduce your interest rate based on your payment history and account standing.
Use your tax refund check to pay down debt
While it’s tempting to splurge on a high-ticket item or go on vacation with that tax refund check, a smarter money move would be to pay down some, or all, of your debt. Consider the value of reducing your monthly payments with a single lump sum debt payoff strategy.
Sell items for cash
Put together a list of items that you could sell on eBay, Craigslist, or at a garage sale. Drumming up some extra cash by selling items you no longer need or are ready to part with and using the proceeds to pay down debt can help you rapidly lighten your debt load.
Consider cashing in your life insurance
Cashing in your life insurance may be a viable debt payoff strategy because it will give you a chance to pay down larger amounts of debt quickly.
If you feel like you are drowning in debt and don’t have beneficiaries that need to benefit from your life insurance policy for example a spouse or children then it might make sense to use those funds to pay off debt.
What is the fastest way to get out of debt in South Africa?
How to get out of debt fast
Debt? No sweat.
Acknowledge and assess. The process starts by first acknowledging that you are in debt and that you want to be debt-free.
Create a plan. At this point, you have all of the information you need to create your debt repayment plan.
Track and control.
Pay cash.
Build wealth.
Is it hard to become debt free?
And while getting out of debt is hard, it isn’t impossible. If you’ve tried or even thought about getting out of debt, it’s best to understand the solvable roadblocks that may be in your way before you start your journey to being debt-free.
How long before a debt is written off in South Africa?
In South Africa, there is what is known as prescribed debt, and in simple terms, this can refer to an old debt that has not received any acknowledgement for three years or more. It also means a loan that has been dormant for not less than three years.
What happens if you don’t pay your debt in South Africa?
If you miss a payment, your entire payment plan will be annulled. For your debt review to be successful, you need to stick to every monthly payment in your repayment plan so that you don’t put your debt review agreement at risk.
At what age should you be debt free?
45
“Shark Tank” investor Kevin O’Leary has said the ideal age to be debt-free is 45, especially if you want to retire by age 60. “Most careers start in early 20s and end in the mid-60s,”
What does bad debt written off mean in South Africa?
Prescribed debt is old debt that has been written off by credit providers. If the last payment was also 3 years or more ago, this account is prescribed and you are no longer allowed to claim this from your debtor, which ultimately means it must be written off.
Can you leave South Africa if you have debt?
Yes, but you will have to explain how the personal debt will be settled, for example from local sources or from transfers from abroad. However, if you owe the South African Revenue Service (SARS) money, they will not issue a tax clearance certificate.
Can a debt collector refuse a payment plan South Africa?
DEALING WITH DEBT COLLECTORS
You are also entitled to refuse to pay anything until they give you details in writing and supporting documents to their claim. With the right approach at the right time, more affordable payment plans can be arranged.