How to tackle the debt monster

We often believe that the only way to pay off debt is with a windfall like a big bonus or winning the Lotto. But this thinking gets us caught in an anti- wealth trap. We spend on our credit cards all year and use our bonus or 13th cheque to settle the debt, only to start the cycle again the following year. We are using those bonuses to pay off last year’s spending rather than investing and building wealth.

Use your monthly cashflow to tackle the debt monster by starting a monthly debt repayment plan that combines managing your budget with a disciplined debt settlement schedule.

Understand your total outstanding debt by drawing up a spreadsheet with all your credit agreement information, including the outstanding amount, monthly instalment, interest rate, fees and the date it will be paid off.

Rather than trying to increase the repayment amount on each loan, target the smallest debt first. If you can settle one debt quickly, it will give you the motivation to keep going and free up more cash to target the next debt.

Read the full article in the magazine.