How to Pay Off Debt

How to Pay Off Debt


The statistics claim that the average South African household uses almost 73% of its income to service debt. This disturbing statistic indicates that we are not well educated about the consequences of debt, and somewhat inept at becoming debt free.

The reality is that paying off debt earlier than expected can save you thousands of rands.

Here are three guidelines to paying off debt:

1) Don’t get into debt in the first place

If you don’t have the money to buy a particular item, don’t buy it. Practice delayed gratification and wait until you have the money. Exceptions to this would be a bond for your home and car.

2) Pay your debt off from highest to lowest interest rate

For example, if you have a bank credit card with an interest rate of 18% per annum, a Woolworths credit card at 12% per annum and a bond on your home at 9% per annum, it would make sense to contribute your surplus income to pay off the bank credit card first until it has been fully paid off, then align your surplus income towards paying off the Woolworths card etc.

3) Decrease expenses and increase income

I have been following the story of a MBA graduate fromHarvardBusinessSchoolwho challenged himself to pay off his student loan of $ 90 717 in 10 months. He had no idea how he would do it as he did not have a lot of cash and his 12 months after tax salary was less than the value of the loan.

After his life savings barely made a dent into the loan, he realised he needed to do more. So he decided to decrease his expenses and increase his income.

During the first seven months, he didn’t go on a single dinner date or go to the movies. He didn’t go home for Christmas, and missed friends’ bachelor parties and weddings. He got better at DIY and figured out things like how to use duct tape to repair his car and zip-ties to repair his house.

During the first seven months, he had not bought a single item of clothing or a single ‘must-have’ gadget or gizmo.

To make extra money, he rented his spare bedrooms to strangers as well as starting a landscaping business.

He sold his second car, motorcycle, road-bike, and other unnecessary items and got rid of things that he thought he could never live without.

After a period of nine months, he had successfully paid off his student loan. His story can be found at:


Remember that it requires hard work, discipline and patience to pay off debt in a fast and efficient manner. Come up with your own goal on how to get rid of your debt and get started today.

Andrew Padoa
Andrew Padoa works in the Private Client’s division at Consolidated Financial Planning. His area of expertise is investments, estate planning, retirement planning and portfolio benchmarking. He has had numerous articles published in the media on a number of topics related to personal financial management. Andrew is passionate about educating people and has given several financial literacy talks to both schools and corporates. His objective is to use his abilities and knowledge to help others achieve their financial goals. Visit for more information
  • What is the quickest way to double your money?

    Fold your bills and put it back in you wallet!

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