There are numerous ways on how you can reduce your debt load. The first obvious step in reducing your debt is to stop it increasing and to start paying off your debt. However for most South Africans it seems too difficult, but you can do it with a planned strategy.

This strategy is known as the Snowball Method. We will discuss this briefly as well as another school of thought on this subject.

This method, in essence is very simple, arrange your accounts from lowest to highest. Use any extra cash you have (by cutting down on certain expenses) and pay off the lowest debt you have as soon as possible. Now, you will have more cash available which you can then use to pay off the second lowest debt on your list. Repeat these steps, until you have achieved the level of debt that you can manage.

When you see your first card repaid, you will realise that this strategy is working and that will give you the necessary impetus you need.

Psychologically, this helps keeping the debtor motivated to continue the program, seeing real progress helps a person to keep to the program. The only negative is that it requires a longer period of time and more money overall to pay off all your accounts that way, the reason has to do with how interest is compounded.

If you pay off R5,000 of debt or R50,000 of debt which may all have the same rate of interest, however paying off the lowest amount initially will indeed cost you more in total interest paid, since any outstanding amount will be charged at the same rate of interest, the higher amount will incur the largest charge, as a result, over time, you will pay more in total interest charges.

Reversing the order and paying the highest amount of debt first, saves you money in the long run, as you pay down the largest debt first, you are reducing the amount of interest and money paid over time. The difficulty is that the latter scheme, though more cost effective in the long run, is harder for most people to remain focused and committed too. It takes a lot of discipline to live with that debt burden as you slowly bring down R50,000 of debt.

That willpower is the one thing that many people deep in debt find hardest to generate. It's the one factor, often, that led to the sky-high debt in the first place, for these people, using the snowball approach may well be an advantage, despite the larger total amount paid out over the life of all the bills combined
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To apply for a debt consolidation loan you will have to fill out a short application form. You will then receive a FREE quote from well established, nationally recognized lenders. You do not need to decide now whether the debt consolidation loan is for you.

Just apply and compare the repayments to your current situation. There is no obligation on your part. If you decide that it is not for you, you simply do not have to accept the offer. You have nothing to lose and everything to gain.

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