In debt but want to start saving? Sugendhree Reddy, Standard Bank’s director of banking products, offers these helpful tips.
- Each month, before you pay your debts, put a little money into a savings account. (The message here is, don’t ignore your debt, but don’t ignore your savings either.)
- List your debts, with those that incur the most interest at the top. This gives you an idea of what kind of debt to avoid in future.
- Focus on reducing one debt at a time. Pay just a little more into one account than you absolutely need to. You’ll be surprised at how quickly the debt reduces. The idea here is, once again, to make saving easier by taking a few small steps at a time.
- When you’ve cleared the one debt on which you’ve been focusing, use the money that you’d have been paying into that account to increase your payments on the next account in line. In other words, you’re creating savings out of your debts.
- Once you’ve paid off an account, close it so that you’re not tempted to accumulate debt again.
- Don’t accept the increased credit limits on your existing accounts that organisations will offer you.
Another way of freeing up money from your debt is to re-examine your insurance policies. You’re probably still paying premiums on assets you no longer have or are still insured for more than the market value of your car. Once you’ve adjusted the premiums, use the money you’ve saved to either bolster your savings account or pay off debt.
“Everyone needs to go into debt at some time, so don’t beat yourself up because you do have some accounts,” Reddy says. “Just work towards having more savings than debt.”
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