How to get out of debt

Debt solution for a

family of three:

Mr Z is a 50-year-old, married sales consultant who supports a wife and a daughter. He lives with his family in Bridgeton, Oudtshoorn, and is a homeowner.

Net Income: R8 000 Expenses: R3 900 (electricity, fuel, clothing, food and household goods, other, bank charges)

Available for debt repayment: R4 100.

Over a number of years, Mr Z incurred several debts, including a personal loan, unsecured credit, a store card and a retail account.

He only had R4 100 available monthly for debt repayment, after expenses. But he owed R10 051 and thus lacked R5 951 monthly.

As follows, he could not meet his debt obligations.

His finances were assessed by obtaining his certificates of balance from all of his various credit providers. Then his debt counsellor negotiated with his creditors, demonstrating that Mr Z did not have the funds available to make his original monthly repayments.

It was proposed that his lenders reduce his instalments and interest rates, and extend his repayment term. To Mr Z’s relief, his credit providers accepted the repayment proposal.

Mr Z now saves R6 815 every month on his instalments, as his total monthly debt repayment reduced to R3 236 from R10 051.

At first, he only had R4 100 to spare for debt repayment. Now, he even has R864 extra every month to save for unexpected expenses, not to mention he is also saving a lot on interest, as his rates decreased too.

Debt solution for low-income earners:

Mr and Mrs M are 52 and 48, respectively. Mr M works as a butcher in Bloemfontein and the couple have no children.

Net income: R4 400 per month. Expenses: R2 350 (electricity, water, fuel, food and household goods, cellphone)

Due to a change in circumstances, the couple became over-indebted and had to make a joint application for debt counselling.

Available for debt repayment: R2 050

Their debt monthly total is R3 483.32, which is R1 433.32 more than they have available. Some of their debt includes a credit card, a Jet account, a Joshua Doore account and bank cash repayments.

As we compare what they earn to the R3483.32 they owe monthly, a troubling picture is revealed. They cannot afford their debt repayments, on top of their monthly expenses.

So it was arranged with creditors for the interest rates to be reduced to ensure the couple can afford their monthly expenses and debt repayment with a bit more breathing room.

They now owe R1 713.63 monthly on debt repayments, as opposed to the previous amount of R3 483.32.

This means they are saving R1 769.69 every month.

The above case studies were provided by National Debt Advisers to help you better manage your finances.