Real Estate Investor Magazine South Africa September 2015 | Page 19
the lender.” It is important to have a strategy not to
accumulate any more bad debts.
Step 1 -Stop accumulating bad debt. Whatever you
purchase via credit cards must be paid off in full at the
end of each month. No exceptions.
Step 2 – Make a list of all your consumer (bad) debts.
This includes credit card, car loans, school loans, home
improvement loans on your personal residence and
any other bad debts you have acquired. You can even
include your home mortgage in this list.
Step 3 – Next to each items listed make 3 columns:
a.Amount Owed
b.Minimum Monthly Payment
c.Number of Months
Enter the appropriate numbers into each column. To
arrive at the number of months, simply divide the
amount owed by the minimum payment.
Step 4 – Based solely on the Number of Months begins
ranking each debt. Put a “1” next to the lowest number
of months, a “2” next to the 2nd lowest number and
continue up to the highest number of months. This is
the order that you will be paying off your various debts.
The reason you will start with the debt with the lowest
number of months is that you want to have your first
“win” or success in this process as soon as possible.
Once you get that first credit card (or debt) paid off,
you’ll begin to see the light at the end of the tunnel.
Step 5 – Come up with an additional R800 to R1500
per month. If you are serious about getting out of debt
– and, more importantly, becoming financially free –
then generating this extra money will not be difficult.
To be candid, if you cannot generate an additional
R800 per month then your chances of becoming
financially independent are slim.
Step 6 – Pay the minimum amount on every debt you
have listed EXCEPT for the one you’ve marked with a
“1.” On this first debt to be paid off, pay the minimum
amount due plus the additional R800 to R1500. Keep
doing this each month until your first debt is paid off.
Scratch that first debt off your list.
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HOW TO GET OUT OF THE DOG BOX
Do not go for Debt Counseling!
This is probably one of the worse things you could ever do
according to Debt Management Attorney Tony Webbstock and
here is why:
1. Debt Counselors get you to pay high start up fees by
making you sto