Debt Management Guide

If you're struggling to keep up with your debts, it's important to understand how to manage them. This can be a difficult task, but it's crucial to your financial well-being. With some careful planning and organisation, you can get your debt under control and start to regain power over your finances. Here are some top tips on how to manage debt.

Introduction to Debt Management

Debt is a part of our lives from the time the first loan is issued. In this guide, we will go through the different types of debt and how you can deal with them. We will discuss what types of debt we are referring to and the various steps you can take to get out of debt and keep it under control. Finally, we will go through some general tips and tricks that will help you manage your debt and improve your money management skills.

What is Debt Management?

We all need to pay debts in life. Some of us just pay them off early by consolidating them into one loan or paying them off faster by increasing monthly repayments themselves. But when it comes to investing and saving money, debt management is key.

Debt management is a debt solution targeted at South Africans who are struggling to make debt repayments but are not yet classified as over-indebted.

You are at a high risk of becoming over-indebted and could benefit from a debt management solution if the amount that you spend toward your debts is more than 40% of the money that you earn monthly.

DebtBusters debt consultants help clients organise an affordable, realistic and structured monthly budget and debt management plan. Debt management also consists of helping clients facing financial difficulties, aiding them in solving their debt concerns and empowering them to take back control over their financial situation by negotiating with creditors and initiating a payment plan. Debt management will provide clients with a guideline for eliminating and remaining out of debt.

Types of Debt

Let’s take a look at the two main types of debt in South Africa:

Unsecured debt

Unsecured debt is a term used to describe loans that do not have any collateral to back them up as security. Because the consumer is not required to utilize any particular assets as security for the loan, the lender runs the risk of not being able to recoup their initial investment in the event that the borrower fails to repay the loan.

The interest rates on unsecured loans are typically higher than those on collateralized loans. This is due to the fact that unsecured loans are seen as posing a greater risk for the lender.

Secured debt

If you get a loan with secured credit, the bank or other lending institution will keep one of your assets as collateral while they make the loan to you. This may be your car or your house. Your house would then serve as the "security" for your home loan, which means that if you fail to make your mortgage payments, the bank will sell it in order to recoup the money it has loaned to you.

The Benefits of Debt Management

Many consumers view debt as a financial burden. However, debt can also be a powerful tool for building wealth. When managed wisely, debt can help you buy a home, finance a business, or invest in other income-producing assets.

Of course, debt must be managed carefully, as it can quickly become overwhelming. But for those who are disciplined and strategic, debt management can be a powerful tool for achieving financial success.

Done properly, debt management can help you build a strong credit history and better your credit score, which empowers you to make bigger purchases. Let’s go through some of the advantages of debt management with DebtBusters.

Expert Advice

DebtBusters' consultants offer a free assessment, after which you will get expert advice on managing your debt and staying on top of your finances.

Tailored Repayment Plans

Debt repayment plans and budgets are tailored to the individual financial particulars of the client at lower interest rates and new payment terms.

Financial Education

The service also educates clients on how to reduce and manage debt and constructively become debt free by gaining financial independence. The process of debt management helps clients keep control of their money and make well-informed decisions about monthly debt payments

Debt management tools

DebtBusters supplies clients with structured and helpful debt management tools needed to gain financial independence. On top of the assistance our DebtBusters consultants give to consumers directly, we also empower people to get themselves financially sorted by using various tools available such as:

• Credit score calculator
• Credit history
• Payments and open accounts monitor
• Risk calculator
• Income vs debt repayment calculator

Reduction in repayments

Finally, in the process debt repayment amounts will be reduced and cash flow increased by managing debt.

Tips for Effective Debt Management

Don't let debt consume your life. Learn how to manage your debt effectively so you can pay off your cards, save money, and live more frugally. This guide covers the three main types of debt (personal, student, and credit card) and explains how you can reduce your monthly payments to do it successfully.

1. Understand Your Debt

The first step to effective debt management is understanding your debt. You need to know how much money you owe, to whom you owe it, and the interest rate on each debt. This information will help you create a plan to pay off your debt.

2. Create a Budget

The second step to effective debt management is creating a budget. You need to know how much money you have coming in and going out each month. This will help you determine how much money you can put towards your debt each month.

3. Prioritize Your Debts

The third step to effective debt management is prioritising your debts. You should prioritise your debts based on the interest rate. The higher the interest rate, the more you will pay over time. Therefore, it is important to focus on paying off high-interest debts first.

4. Make More Than the Minimum Payment

The fourth step to effective debt management is making more than the minimum payment on your debts. If you only make the minimum payment, you will end up paying more in interest over time. Therefore, it is important to make more than the minimum payment each month in order to pay off your debt quicker and save money on interest. There is of course the option of debt counselling, which could be a potential solution for those who are not able to pay.

Get Started with Debt Management with DebtBusters

Debt management may seem like a daunting task, but it doesn't have to be. It is all about taking control of your finances and making a plan to pay off your debt. The first step is to figure out how much debt you have. This includes credit card debt, medical debt, student loan debt, and any other debt that you may have. Once you know how much debt you have, you can start to create a plan to pay it off.

There are a few different ways to do this, but the most important thing is to make sure that you can make your payments on time each month.

Debt management is all about creating a budget and sticking to it. If you can do that, you'll be on your way to becoming debt-free in no time. Explore DebtBusters' solutions for reducing your interest rates and unlocking cash.