Step 1 – Don’t fall for the instant gratification debt trap
Most South Africans put themselves into debt because they want things they don’t really need. They feel better about themselves when they buy the latest flat screen TV or new Gucci cufflinks even though they spend money they don’t have.
Well, you don’t need these lavish expenses weighing you down when you’re trying to pay off your debt. Instead, save for the things you want. You may find that when the time comes to spend the money you saved, you won’t need to buy it.
Step 2 – Pay off your highest interest debts first
Credit cards and personal loans usually carry the highest interest rates. So make a list of all your debts and look at the ones with the highest interest rate. Pay that one off a little quicker. Once it’s paid, put your extra disposable cash to the next one on the list and carry on like this until your debts are paid off.
Step 3 – Don’t take out any extra loans
When you’re in the middle of paying off your debts, the last thing you should do is make more debt. Be responsible and avoid taking out any new loans or credit cards. You see you can’t start investing your money until all your debts are paid.
Step 4 – Invest for the long-term
Once all your loans and debts are paid off, use the money you’re saving to open an investment account. It’s easier than you may think. Because you’re new to the world of investing, you can now start using your extra cash to educate yourself on the stock market.
FSPInvest.co.za has a wide range of products and services that can assist you with this. My first suggestion to take a look at the amazing things Joshua Benton is doing with his monthly newsletter, Stock of the Month, he shares all his best investment strategies and also shows you the best stock to invest in on the JSE every single month.
Let’s build your wealth together,
Contributing editor, FSPInvest.co.za