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‘Being debt-free’ is the general response at 99% of my financial talks, when I ask the question ‘what does financial freedom mean to you?’ Debt and often over-indebtedness still seem to be the biggest financial concern for many South Africans. The statistics are showing that R19million of South African adults are credit-active of which R11million are over-indebted. Convert these figures and it becomes clear that almost 30% of South Africans are over-indebted. Considering the statistics, debt and over-indebtedness are universal concerns. Many people are stressed about their level of debt.

I was fortunate that my parents had a ‘cash is king’ mind-set. I have grown up knowing we couldn’t have something until we can pay cash for it. This was probably one of the best lessons my parents taught me, because when I started earning my own money I applied this principle. I saved up to buy my first car cash and the second one and the third one… The fact that I bought my first car cash definitely helped me in a big way to buy my other cars cash too.

When I had to apply for a bond to buy my first house it was a scary thought. Fortunately I saved money for a big deposit and I could buy all my furniture and appliances cash, but having debt made me feel very uncomfortable. Even more so because I bought my first house in 2008 just when the recession hit the ocean and sunk many people’s boats. I had one objective in mind: to become debt-free as quickly as possible.

I applied these three methods:

  • I set-up my monthly debit order for an amount higher than what the minimum installment requirement was. By doing that I became used to paying a higher installment and all the additional money I paid was allocated to reduce the capital balance.
  • I transferred the excess money I had left at the end of every month to my bond as well. It made my capital amount reducing even further.
  • Whenever I received additional money i.e. a bonus or refund from SARS or for whatever reason, I paid the majority of that additional money over to my bond. The capital balance reduced quicker and quicker…

…. 6 years later I was debt-free and owning my first property. This was such a huge relief and achievement at the same time. I was debt-free in my early thirties. Sometimes I do get tempted to buy something on credit, but I always ask myself: ‘do you want to become poorer by paying interest and in the process make the bank manager richer?’ My answer is always: ‘No definitely not!’ That is how I prevent incurring debt.

During the next few weeks I will be discussing the 10 financial concerns many South Africans face in more detail – subscribe to my YouTube channel and follow all the discussions. 

Written by Ronel Jooste

CA(SA), Financial Consultant and Coach, Blogger and Speaker

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For more information about my financial wellness programmes visit the website