Tag: credit

By Thotoane Ramakhula In life, it is not uncommon to face situations where you may bite off more than you can chew. Many people take debts and sometimes find themselves grappling with indebtedness due to their ambitious pursuits or unexpected expenses such as medical bills, home repairs, or simply living beyond their means. If not managed, debt can quickly spiral out of control, leaving individuals burdened with insurmountable financial obligations and struck in the debt cycle. What is the debt cycle? Navigating personal finances can be daunting, particularly where debt is concerned. Many individuals face a debt cycle where borrowing becomes necessary to meet immediate financial obligations. When expenditure consistently exceeds earning, individuals rely on credit cards and loans to bridge the gap. This cycle continues as debts accumulate, often with high-interest rates, making it difficult to repay. Overtime this can impact personal well- being and long-term financial goals. Consider the below scenario for example. Ithabeleng, a twenty-four-year-old, faced a sudden and significant expense when hospitalised for a medical issue. Without sufficient savings to cover the unexpected bill, she felt compelled to resort to borrowing money. This decision was driven by the urgent need to settle medical expenses promptly, highlighting a common challenge where unforeseen costs can disrupt financial stability, leading to reliance on debt as a temporary solution. What steps can Ithabeleng consider? Steps to take when facing overwhelming debt Sometimes, circumstances make piling debt unavoidable. However, once you find yourself in this situation, there are steps you can take to regain control and mover towards financial stability; Create a detailed budget: Start by outlining your income and expenses. Identify areas where you can cut back on unnecessary expenses or luxuries. Temporarily pause investments to allocate more funds towards debt repayment. Establish a payment plan: Prioritise debts based on interest rates or utilise the snowball method, where you start with smaller balances to build momentum. Make minimum payments on other debts to avoid penalties and focus on clearing high-interest debts first. Avoid new debts: Resist the temptation to take on additional debt while repaying existing ones. Commit to a debt-free approach to maximise resources dedicated to paying off current debts. Increase your income: Consider different opportunities to generate extra income through part-time work, freelancing or selling unused items. Every additional Loti earned can accelerate debt repayment and improve financial security. Seek professional guidance: If managing debt becomes overwhelming or complex, seek advice from financial advisors or debt counselors. They can provide personalised strategies and support to help regain control of your finances. In conclusion, navigating debt requires discipline and a proactive approach. You can take significant steps toward becoming debt-free by creating a realistic budget, prioritisng debt repayment, avoiding taking new loans, increasing income and seeking professional guidance when needed. Remember, consistency and commitment are key to achieving financial freedom and peace of mind! Thotoane Ramakhula is a Financial Paraplanner at TKO Financial Wellness & Advisory and has a strong passion for financial planning and wealth management.

Tag: credit

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