You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

Six-step game plan to becoming debt-free by December

Begin by making your smallest debt your biggest priority.
The snowball-effect method motivates you through a series of small wins. Image: Shutterstock

Are you one of many South Africans currently paying off credit? According to the National Credit Regulator, settling outstanding loans should be a priority for consumers in 2020.

While this may sound daunting, it doesn’t need to be just another impractical resolution. Rather, the well-known ‘Snowball’ strategy can be one way to pay off your loans and start the new decade debt-free.

Read: Mounting credit card debt: A financial horror story

Having a plan can help you pay off your debts faster, saving you interest and increasing your monthly disposable income. The debt snowballing method is a simple and practical way to do this.

How debt snowballing works

You may have seen pictures of a snowball rolling down a hill. It starts small, but as it rolls it gathers more snow, growing bigger and bigger as it gains momentum. By the time the snowball reaches the foot of the hill, it’s much, much bigger than when it started.

The same basic idea applies to the snowball method, which motivates you through a series of small wins.

You start by paying off the smallest debts with higher interest rates, which gives you more funds to pay off the bigger ones.

From a psychological standpoint, this makes debt seem more manageable and gives you a way to take back control.

Here’s how it works:

  1. List all your debts from the smallest amount to the largest amount
  2. Make the minimum repayment on every debt, except the smallest one
  3. Make your smallest debt your biggest priority – repay as much as you can on it to pay it off as quickly as possible
  4. Once you’ve paid off the smallest debt, add that amount you’ve freed up to the next smallest debt
  5. Now repay as much as you can on this debt until it’s paid off
  6. Keep going, until every debt is paid in full.

Why debt snowballing makes sense

It’s easy to see why this approach makes so much sense. As you pay off smaller debts, which often have higher interest rates, you free up more money to pay towards the bigger debts, which means you will see results sooner. It’s simple, methodical and systematic. It also forces you to focus on getting your budget out of the red and into the black. 

In addition to the snowball method, here are more credit management tips for 2020:

  • Only take credit for the right reasons. Ask yourself ‘Will the value of the item outlive the credit repayment period?’. For example, buying a computer for your business will allow you to generate an income long after the credit has been repaid.
  • Always compare the total cost of credit when taking out a loan. Most people only compare the interest rate, but other costs such as credit insurance and any admin fees should also be part of your consideration.
  • Consider consolidating all your debt into a single loan as this can lead to a lower monthly repayment amount. You’ll also only have one payment to keep track of each month.
  • Settle the full outstanding balance on your credit card statement to take advantage of the 55-day interest-free period. This means that if you buy a laptop on your credit card and settle the full amount before the 55-day interest-free period ends, you won’t be billed any interest.
  • Consider the 50/30/20 budgeting rule where 50% of your income is dedicated to needs such as groceries, utilities, health and insurance; 30% is allocated to wants such as hobbies, dining out and shopping; and the last 20% is filtered into repaying debt and savings.

Francois Viviers is marketing and communications executive at Capitec.

Listen to Nompu Siziba’s January 13 interview with Carla Oberholzer of DebtSafe:



Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.


Now here’s a guy with a plan HOWEVER. Most people continually use credit cards and use up the additional they put in., I did this too. So I would like to add TAKE THE CREDIT CARDS OUT OF YOUR WALLET!!!!!!!!!!!!
It’s been a fun ride with the credit binge. Now, some pain is needed. Also, quit reading sale papers. You can always find something on sale that you could use. If you never opened the damn paper you wouldn’t need it !!!! Dr. Debt

i used my credit card only for 1 reason: at month-end i get the account with a clear description of what was bought on e-mail – for accounting purposes i import this data straight into an accounting package iso doing it all by hand and

the credit card must have a balance to my credit otherwise it is simply not used – don’t want to get surprises or rather shocks at month end

I would like an article on how to stop smoking.

Stop buying cigarettes

….and BUY British American Tobacco (BTI) shares instead 😉

Perhaps, another step-down away from smoking, could be vaping(?) Still not healthy, but less chemically damaging than traditional cigarettes (and it doesn’t irritate people around one as much, i.e. restaurant smoking areas.) And also good for your BTI shares….

I managed to stop smoking completely: I realised I were too brutal on my car’s accelerator pedal during pull-offs! A lighter throttle = suddenly no smoke.

I stopped smoking many times for a couple of days, then started again to find myself smoking more per day. Eventually smoking up to 60 a day. One morning I decided to stop. Made a note in a little pocket diary as follows. Date …10.04 I DECIDED TO STOP SMOKING. Every time I felt like smoking, made a note and my notebook looked like this 10.07 Find myself with a cigarette in my hand Stop 10.09 Feel … STOP S Needless to say the first day I was full time busy making notes Thereafter less and less notes This worked for me perfectly. I smoked for 12 years and stopped for 50 years. This article is about saving money. Well unfortunately I have not saved the money I would have spent on cigarettes,meaning I do not have a Ferrari!!

Anthony Constantinou says, “A person who doesn’t do proper money planning can’t be debt free at all. “

Finding the little bit extra can be tricky. We run a jar at home. Every time we make the pizza instead of buying it, or drink water from the tap and dont buy the bottle water/cooldrink the money goes in the jar.etc

This is either used to pay debt or for the treat/holiday. Great way to save and change habits

End of comments.





Follow us:

Search Articles:Advanced Search
Click a Company: