If debt gets out of hand it can be crippling and settling it should be your top financial priority. Remember that debt is not only about owing your friend N$1 000 but it also refers to your clothing accounts, your car repayments and any other money which you have borrowed and are paying interest on.
If you do not manage to get yourself out of debt you may be declared insolvent – this will affect your financial health in the future.
You are in debt if you have:
- High credit card expenses
- Lots of accounts
- Unpaid bills
- Personal loans
How to get out of debt
You need to fully understand how serious debt is and make a personal commitment to extricating yourself.
Assess which debts are the most urgent i.e. which is going to result in legal proceedings or black listing?
Assess which debt is costing you the most.
Even if you cannot pay the full installment pay what you can – every bit helps keep interest accrual at bay.
Speak to your bank about debt consolidation. The chances are that the interest rate on one account will be less than the cumulative interest of all your accounts.
Talk to your creditors
Most companies want their money back and will be happy to assist you in developing a repayment plan. Should you choose this route you will only have one chance to prove yourself trustworthy.
Try to avoid selling policies and investments if you can. If you have to sell something rather sell your unit trust investments than your policies which will generally have onerous penalties.
Find out more about managing debt.