How do you start saving when you have debt repayments and living expenses to take care of? The short answer; it’s a tricky balancing act. It is not impossible to save while paying off your debt, it just takes a bit of know-how. Find out how you can start building a better future for yourself while paying off your debt.
The average South African pays at least a third of personal disposable income towards debt repayments. According to News24 the average South African is around R70 000 in debt. Although it may seem impossible, we’re here to tell you, it’s not. With a bit of hard work and focus you can save some money while paying off your debt.
A savings account is a safety net for when the unexpected happens. As much as we think we’re in control of our lives, we have to be prepared for when things don’t go as planned.
Find out how you can start saving while paying off your debt.
Determine your payment method
If your goal is to get rid of debt, you need a full proof strategy that will help you along the way. There are a few strategies that you could use to pay off your debt. The most common method tackles debt with the highest interest rate first. This method is called “the highest interest rate method”.
The idea is to pump as much money into your debt as possible and tackle your debt one by one. Pay off your debt with the highest interest rate first. Once that’s payed off, move on to the debt with the next highest interest rate, and keep moving down the list until you’re finally debt free.
Another method turns the “highest interest rate method” on its head, quite literally. In this method you’re focusing on the debt that has the lowest balance. Once you’ve settled that debt, move on to the next smallest debt on the list. Eventually you’ll build up enough momentum to tackle the debt with the highest balance.
Both of these methods work great when you’re struggling to get rid of your debt. Find out which strategy will work the best for you; 3 ways to get out of debt and live to tell all about it.
Now that you know how you’ll be paying off your debt, let’s look at how you can start saving more.
Start a side hustle
One way to start getting rid of debt and start saving more is to start making extra money on the side. There are a few ways you can do this. Find something that works for you, and if it doesn’t work out immediately, find something else that will suit you better.
Here are a few examples to get the ball rolling.
- Ask for overtime at the office
- Are you a good cook? Make some tasty goodies and sell them at your local farmers market over the weekend. If you’re a terrible cook, well sell something else. Sell old clothes or create something from scratch.
- Start your own blog. This is a popular method for making additional income.
- Perform as a DJ at your local pub.
- Be a part time photographer.
- Be an online freelancer.
- Become a tutor for local schools or universities in the area.
These are only a few examples of what’s possible, there are plenty of other options out there.
Use your side hustle as a way to generate additional income that you can push into your savings and retirement funds. Sure, a side hustle means you’ll be working a lot more, but the reward is worth it.
You need to determine how much you can save comfortably without interfering with your debt repayments. It will take you longer to pay off your debt when you save some money at the same time. But in the long run, you’re providing yourself with financial security and reducing your chances of making more debt.
You can always set a savings benchmark for yourself. For example, set yourself a goal of R30 000. Once you’ve reached that goal you can start pushing what you would have saved into your debt repayments.
It’s not impossible
If you truly want to build a better future for yourself, start saving small. When we think about saving, we generally think about saving big. And when we realise that we can’t afford to save that much, we give up.
Challenge yourself to simply start saving anything you can. That means anything from R10, R50 or R100. By juts starting, you’re developing a savings habit, and it becomes easier the more you do it.
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