3 Steps to Becoming Debt Free

Up until the age of 26 I had absolutely zero debt & couldn’t understand why people bought stuff they couldn’t afford in the first place.

Then it all happened at once, my business took a major financial hit & I couldn’t afford the standard of life I was accustom to.

No more spending tens of thousands of Rands on clothes, booze & holidays. No more buying cars cash either!

I don’t recall exactly when I had that moment of ingenuity, but I’ll never forget the exact thoughts:

“Let me grab a few things on credit & when my business turns around I’ll sort it all out one shot!”

At first it was a total sports account, and then a R500k Jeep & before I knew it I had reached my R75,000 credit card limit too.

It’s no secret that creditors can be our bestfriend when payments are on time, but I’m sure I don’t have to begin to explain how quickly they can set their dogs (lawyers) on us when payments start showing up short.

Eventually my vehicle got repossessed & auctioned off. I had lost my R40k deposit, one-year worth of repayments & the best part… I was still liable for the shortfall on the agreement.

Most of all I was just sick & tired of paying down all my debts, just to reuse the balance before the month was over.

Interest here, Interest there, fees here, fees there! Enough was enough, I was 28 and had to climb out this hole once & for all. ( Or I’d probably be in it forever )

This is how I managed to get out of debt…

1.) Take 100% Responsibility

You have to take 100% responsibility for where you are in your life.

It was your choices & your choices alone that have put you in the mess you find your self in today.

So it’s time to…

  • Forgive the creditors for granting you so much credit!
  • Forgive the debt collectors for hounding you!
  • And most of all forgive your self for getting into this mess!

Get rid of all that resentment & get ready for a lifetime of being debt free.

Are you ready to commit to get out of the debt once & for all?

2.) Draw Up Your Battle Plan

A budget is People telling their money where to go instead of wondering where it went – John Maxell

Stock Take: Open up a new excel spread sheet or download mine for free ‘Stock Take & Budget Template‘. Jot down all your outstanding debts & total minimum monthly payments for each debt starting with the smallest debt first.

Budget: Using the same spreadsheet draw up a monthly budget, jot down your income & all your minimum living expenses rent, food, water, lights, petrol etc.. ( not including your debt repayments )

Tally up: Allocate what’s left in your budget to your debt repayments starting with your most important obligations first (home & vehicle repayments).

One of two things are going to happen:

  1. Enough Money
    So you’re one of the lucky ones that have enough cash to cover your debt obligations and maybe even have some left over.
  2. Not Enough Money
    You don’t have enough money to keep up with all the repayments & that’s ok you are not alone over 50% of South African’s are over indebted.You need to allocate the money you do have to your most important debts first starting with your home & vehicle.

Can you cover your home? If yes continue, if not it’s time to scale down.  Sell it or rent it. There is no point to keep on paying for something that bank is going to repossess a few months down the line.

Can you cover your vehicle? If yes continue, if not ask your self do you need it or is it a luxury?

If you need the vehicle call the credit provider to make an arrangement or trade it in for a more affordable vehicle.  If it’s a luxury sell it!

Now that you’ve covered your two most important assets, phone all you creditors and lay down the facts and plead with them to make an affordable arrangement.

Most credit providers are 100% willing to work with you. Some are stubborn & wont budge, if that’s the case stop paying immediately.

I mean f#ck it you tried to be reasonable what do they expect from you?

2 or 3 months down the line you will get a call from their debt collection firm who will be more then willing to work with you!

3.) Accelerate

Now that you’ve decided to kill the debt monster and have a written plan in place, you’ll be surprised at how motivated you can be to find more money.

I found that when I focused my energy on developing new empowering habits in two areas of my life I instantly started to see a return on my investment:


  • The Latte Effect
    If you like anybody else in the world, you have a daily vice… a cappuccino or delicious smoothie from Kauai.

Let’s just say you spend an average of R50/day on junk:

R50.00 – 1 Day
R1,500.00 – 1 Month
R18,000 – 1 Year
R180,000 – 10 Years

It’s the little things that add up!

  • Track Your Expenses
    Make it a habit to write-down every expense you incur, use a piece of paper or the fancy spreadsheet I’ve created for you.

I found within a few days I had become so aware of my spending habits that I actually started to dislike spending any money.

In fact when I did spend I was bargain hunting, searching for specials and making use of rewards programs such as Pick n Pay Rewards, Vitality & eBucks.

Increase Your Income

  • Ask For a Raise – Set a meeting with your boss, show him your debt plan & ask for a raise.
  • Work Over Time – Ask for more hours, work nights, Saturdays, what ever takes! Just increase your productivity.
  • Spare Job – Find a job as a waitron 2 or 3 nights a week.
  • Make Money Online – Check out this article on 13 ways to make money online.

How can you allocate your new FOUND MONEY most effectively?

I personally used a little tactic known as the Debt Snowball Method.

Basically you allocate all your extra cash towards your smallest debt. Once that debt is paid up, you allocate the minimum payment you had for it plus all your extra cash towards your 2nd smallest debt.

Check out the illustration below to see it more clearly:

Debt Snowball Method

That’s it…

Simply commit today to getting rid of debt once and for all. Commit to decreasing your spending & save money.


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