South Africa has one of the highest household debt ratios in the world. Millions of South Africans are paying more than half their income towards debt every month. If you're one of them, you are not alone — and there are proven strategies to help you break free.
Step 1: Understand Where You Stand
Before you can fix your debt, you need to understand exactly how much you owe. Create a complete list of every debt, including:
- The creditor name
- Total outstanding balance
- Monthly payment amount
- Interest rate
- Whether you are behind on payments
Calculate your debt-to-income ratio by dividing your total monthly debt repayments by your gross monthly income. If this ratio is above 50%, you are likely over-indebted and should consider formal debt relief options.
You can use our free debt review calculator to check your ratio instantly.
Step 2: Create a Realistic Budget
A budget is the foundation of any debt repayment plan. Track your income and expenses for a full month. Categorise your spending into:
- Essential expenses: rent/bond, food, transport, utilities, school fees, medical
- Debt repayments: loans, credit cards, store accounts, vehicle finance
- Discretionary spending: entertainment, eating out, subscriptions, clothing
Look for areas to cut back. Even R500 a month redirected towards your highest-interest debt can make a significant difference over time.
Step 3: Choose a Debt Repayment Strategy
The Avalanche Method
Pay the minimum on all debts, then put every extra rand towards the debt with the highest interest rate. Once that debt is paid off, move to the next highest. This method saves you the most money in interest over time.
The Snowball Method
Pay the minimum on all debts, then put every extra rand towards the smallest balance. Once that debt is paid off, roll that payment into the next smallest. This method gives you quick wins that keep you motivated.
Negotiate Directly with Creditors
If you are behind on payments, contact your creditors before they contact you. Many are willing to offer reduced interest rates, payment holidays, or temporary reduced instalments. Always get any agreement in writing.
Step 4: Consider Formal Debt Relief Options
If your debt-to-income ratio is above 50% and you cannot afford your minimum payments even after budgeting, you need formal help. South Africa offers several legal options:
The most common and recommended option for over-indebted consumers. A registered debt counsellor restructures your repayments, reduces interest rates, and provides legal protection for your assets. You pay one affordable monthly amount.
Taking a new loan to pay off existing debts. Only suitable if you have a good credit score and can qualify for a lower interest rate. No legal protection is offered.
A court-supervised debt repayment plan for debts under R50,000. Less common than debt review and has significant limitations.
A last resort where your assets are liquidated to pay creditors. This should only be considered if all other options have failed. You lose your assets and it remains on your credit record for years.
Step 5: Avoid Common Mistakes
- Don't ignore the problem. Debt does not go away on its own. The longer you wait, the more interest accumulates and the harder it becomes to recover.
- Don't borrow to pay debt. Taking on new debt to pay old debt (except through a structured consolidation) only deepens the cycle.
- Don't fall for debt relief scams. Only work with NCR-registered debt counsellors. Check registrations on the NCR website. Avoid anyone who promises to "erase" your debt.
- Don't skip payments without communicating. If you are going to miss a payment, contact the creditor first. Communication can prevent legal action.
Step 6: Build an Emergency Fund
Even while paying off debt, try to save a small emergency fund — even R1,000 to R3,000. This prevents you from relying on credit when unexpected expenses arise. Start small: save R100 a week if you can.
Step 7: Stay the Course
Getting out of debt is a marathon, not a sprint. Celebrate small wins — every account paid off is progress. Track your balances monthly and watch them shrink. The sacrifices you make now will pay off in the form of financial freedom.
Frequently Asked Questions
What is the fastest way to get out of debt in South Africa?
The fastest way depends on your situation. If you can afford extra payments, the avalanche or snowball method works well. If you are over-indebted and cannot keep up, debt review is the fastest legal route because it immediately reduces your payments, stops creditor action, and provides a structured timeline to become debt-free.
Can I negotiate with creditors myself?
Yes, you can contact your creditors directly to negotiate lower interest rates or payment holidays. However, there is no legal obligation for them to agree, and you have no legal protection. A registered debt counsellor has more leverage because the process is backed by the National Credit Act.
Is it worth going under debt review?
If you are over-indebted, debt review is one of the most effective solutions available. It reduces your payments, protects your assets, and gives you a clear path to becoming debt-free. The alternative — defaulting on payments — leads to blacklisting, legal judgments, and potential asset repossession.
