Three ways you avoid the debt spiral by breaking free from credit dependency

Start taking control of your finances so you can stop relying on credit and avoid spiralling debt. Picture: Freepik

Start taking control of your finances so you can stop relying on credit and avoid spiralling debt. Picture: Freepik

Published Dec 5, 2023


The economy is pushing the cost of living beyond the reach of many South African consumers which is making it hard for them to make ends meet, according to an expert.

Bertie Nel, head of Financial Planning and Advice at Momentum said that when people live beyond their means, it could lead to spiralling debt which they feel like is an impossible cycle to break free from.

“Using credit for everyday expenses such as groceries, fuel, and utilities might seem like a quick fix, but provides only temporary relief and it can have disastrous effects over the long-term, especially in the face of the rising interest rates,” Nel said.

When it comes to debt, consumers find themselves stuck in a tough situation because they have existing credit commitments and when interest rates increase, the money left over for saving and expenses decreases. With less money to spend on your important expenses, people turn to debt.

Nel shares three ways people can avoid using credit for daily expenses.

Create a budget

Creating a budget will allow you to plan your spending, so you can set aside money for essential expenses, including rent, utilities, food, and transport. Having a budget will help you avoid overspending and keep track of where your money is going.

Tyrone Lowther, head of Budget Insurance, said: “Whether you are trying to get out of debt, save some money or simply stay in the green, a basic budget is one of the most underrated tools for gaining control of your finances, managing expenditure, saving and avoiding debt.”

Build an emergency savings fund

Having an emergency fund can help you cover unexpected expenses that you may rely on credit for. People should have at least three to six months’ living expenses saved up in their emergency fund.

You can start small by putting away a small percentage of your income every month and increasing it as you go along.

“Involve your family members and make it a family goal to save for anything, from a family holiday to a new car,” Nel said.

Reduce unnecessary expenses

Take a look at your monthly expenses and see if you have any subscriptions that you can live without. Those seemingly small expenses can add up over time, so it is important that you cut back. Reducing your expenses will give you a significant margin for saving and a sense of control over your finances.

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