Most of us have debt, maybe more than we care to admit in public. According to the most recent study, South Africans consumers have R1.7 trillion outstanding credit, and only 15% of working South Africans are saving. We are spending too much and saving too little. But which is more important, saving or paying off debt? Is it possible to do both at the same time?
This brings us to the question, can you save while paying off debt?
By paying off debt, you are actually moving forward. That’s because the interest rate on debt is much higher than it is on savings. So, by paying off debt you’re saving already, even if it is just a little bit.
It is important to pay your debts off every month and not miss a single payment. If possible, try to pay more than the minimum amount required. The minimum amount required is usually just interest and not the actual amount you still owe. By paying more than the minimum, you are slowly but surely making a dent in your debt.
If you have money left after you’ve paid off all your debt and the necessary items – excluding luxuries that you know you can do without – make sure you put some money away every month. That way you’re saving while paying off debt.
If you’re unable to keep up with your debt payments while putting money aside for those unexpected expenses life throws at you, take the time to speak to a reputable debt counsellor. By consolidating your debt through a debt counsellor, you could negotiate a lower interest rate. There is also the possibility of an extended timeframe in which to pay off your debt so that the monthly repayments are lower. With lower monthly repayments you could be able to save while paying off debt.
According to debt counselling firm, Debt Rescue, an individual is concidered to be over-indebted if they are struggling to make ends meet due to excessive monthly debt installments. Through the company’s 5-step debt counselling process, South Africans can be freed from their debt problems.