Sometimes clearing the decks is the best way to make a clean start. Regarding your finances, this clearing out could be reducing your debt levels. Applying these 7 steps can help you get your household debt under control.

1. Know why you want to do this

You’ll struggle to stay committed to debt reduction goals if you don’t own the process. The best way to stay motivated is to be clear about what you’re gaining from cutting debt. We all have our own private goals, so home in on yours. Use this to develop a picture of what your future self looks and feels like – the one with less debt, and more to spend on your goals. Whenever you’re about to spend money that should be going towards your debt, recall this picture of your future, happy self. Only you can make that picture a reality, by staying the course.

2. Pay more than the minimum amount due

The best way to get out of debt faster is to pay more than is expected every month. It’s important to understand that your monthly instalment is made up of a principal and an interest component. The principal component is the money you’re paying to lower the amount that you still owe. The interest component is the monthly finance charge that is calculated on how much you still owe. So, every time you can pay in more than the minimum amount, you reduce the principal amount owed faster. Do that often enough and you’ll be taking ever bigger chunks out of what you owe, as that amount (and therefore, the interest paid on it) gets smaller and smaller.

3. Use an accelerated payment strategy

In addition to paying more than the minimum amount, you could add the snowball debt reduction strategy. Pump whatever extra money you can into your smallest debt, while continuing the minimum payments on your other loans and accounts. Once the smallest debt is settled, you take the amount you’d been paying on it and add that to the payments on your next-smallest loan every month.  This approach is worth considering if you struggle to motivate yourself using only a vision of your future. The mental boost you get when you see a debt cleared completely will encourage you to continue with the process – and by starting with the smallest amounts owed, you will start feeling that little thrill of achievement sooner.

4. Grow your income

The maths is simple: if you earn more, you can pay more every month and get out of debt faster. Earning more just because you decide you need to, is far from simple, though. Taking on both a full-time and a part-time job, or even extra shifts at your job, is one option you might have, but if that isn’t feasible a more realistic option is your own part-time side hustle. If you have the right entrepreneurial spirit and a marketable idea, your options are limited only by your imagination. You might be able to turn a hobby into an income generator, provide a weekend service that your neighbourhood needs, or market your skills online for after-hours gigs as a consultant or tutor. Remember, the aim is not for this to become a permanent sacrifice of your time. Depending on the amount of debt you want to settle, you can review your options every 6 months or so. Once you’ve settled your targeted debt, you can decide whether you’ve built up a viable side hustle that you’d like to keep developing, or whether you’d prefer a lower income but more free time.

5. Adjust your lifestyle

If you want to be able to pay more towards your debt every month, cut back on excessive spending. Deciding what is ‘excessive’ will differ for everyone, but if you prepare a proper budget and are brutally honest with yourself, you can separate your essential expenses from the non-essentials. The more spending you can avoid on purchases you want but don’t really need, the more money you save to put towards clearing debt.

6. Sell what you don’t need

Is there anything in your home that you haven’t used in 6 months, or a year? That’s clutter – if it has value to someone else, you could sell it and use the cash to accelerate debt repayments. Selling privately is simple – many online services from Facebook Marketplace to OLX and Gumtree allow you to advertise for free. That said, you should remain cautious when dealing with people you don’t know. When exchanging cash for goods, meet in safe public spaces and in the company of friends or family.

7. Consolidate or switch for a better interest rate

A savvy way to get a lower interest rate on existing debt is to take out a consolidation loan – provided its interest rate is lower than the average interest you’re already paying on that debt. By paying off all your different debts immediately, you cancel those higher interest rates, and simplify your loan costs and repayments to a single monthly payment. Do this right, and your minimum monthly payment should be lower than the total amount you were paying before – so if you can continue to pay the same amount as you were paying, you’ll reduce the amount owed faster.

You could do something similar with a credit card – open a new card account with a bank offering you a lower rate and transfer your balance from the old card to the new. If you opt for this route, you may want to take advantage of our introductory offers, which apply when you move your credit card balance to Nedbank from another bank.

Clearing debt takes a little planning and a lot of commitment. It’s a worthwhile step if you’re starting to be stressed by debt, though. When you are satisfied that any debt remaining is at a level where the convenience it adds to your life is worth the cost, then debt becomes a tool, not a burden.