Don't fall into the debt pit in 2013

Many people think that borrowing money to help them get through the first few months of the year will be a quick fix solution; however, taking out a loan or using credit cards to help cover short-term expenses can escalate into a big financial problem and may even result in being blacklisted if not managed properly.

R183 a month just in interest

For instance, if you have R10 000 on a store card and the interest is 22% annually, you will be paying off R183 a month just in interest without making a dent in the actual loan. This money could be used to save for your children's education, pay off your home loan quicker, or even treat yourself to something that month.

One of the major problems is that people stop paying for policies and long-term investments in order to service their debt, and this impacts on their financial future.

If you have already taken out a loan or maxed out your credit cards and store cards to get through the month, there are ways to take back control of your finances and enjoy a debt-free 2013.

Acknowledging that you are in debt makes it easier to address the problem. Firstly, you need to stop increasing your debt, which allows you to focus on paying off your current commitments.

Secondly, plan and be responsible for your own finances. Write down every expense for the month, including groceries, clothing, electricity, rent or bond and credit card repayments.

Cut down on spending and clear your debt

Once this has been done you will quickly see that there is space to cut down on spending and clear your debt. Do you really need new clothes, or can you wait for a few months?

If you find yourself with major problems this early in the year, make small changes to your budget, spend less on unnecessary items and, if need be, approach your bank to find a solution, such as negotiating a longer payment term. They are there to help and they will advise on the best way to manage your finances so you don't have to stop paying towards savings and investments, which are essential to your future.

Once you have your debt under control, consider putting away a bit each month to get through the 2013 festive season so you can start 2014 debt free.