Here's how to save money even if you're drowning in debt

Well, where there is a will there is a way – regardless of how impossible that way may seem.

According to the latest Credit Bureau Monitor data, 40% of active credit users in South Africa suffer from a damaged credit record as a result of poor financial management.

So it’s quite common to find yourself unable to save when paying the bills already seems like an impossible task.

“For many consumers, an additional loan seems to be their best option to get themselves out of financial stress,” says Nicky Lala-Mohan, Credit Ombudsman of South Africa. “However, this leads to a further debt spiral.”

Instead of making debt to pay off debt, Nicky has other options for those looking to manage their financial imbalances, while at the same time save some cash.

Create a budget

List your income, expenses and determine which is more important and needs to be paid first. Manage your funds according to your obligatory expenses – and include saving on that list, not matter how small the amount. The secret to having a budget is sticking to it.

Close existing debt

If there’s a specific account you are able to pay off in one go, do so. Your wallet might take a knock, but considering the steep interest rates, it’s better to make a once-off sacrifice than suffer for months. The sooner you close some debt, the more you save on future interest as certain credit agreements attract higher rates of interest.

Negotiate for better interest rates

 Yes, your interest rate on your credit is not always set in stone. There are ways to work around reaching a figure that will make completing the payment easier on you. It’s important to understand what the interest rates are and to negotiate for the best rates. A good credit record will also assist in negotiating better rates.

Avoid using credit for day-to-day essentials

That sandwich should preferably not be bought on credit, neither should that card get swiped to throw a few litres of petrol in your tank. You might consider it insignificant, but it's unnecessary credit and could come back to bite you. Buying day-to-day essentials on credit could indicate that you’re living beyond your means.

Have an emergency fund

 An emergency fund is crucial for exactly that: an emergency. If you don’t have funds readily available in a dire case of need, you’ll have to resort to borrowing and there’ll be exorbitant changes that will follow.