Times are tough, and South African consumers are struggling under the pressure of increased inflation and high interest rates as well as a rise in the cost of living.

Chantel Pieterse, head of Operations, Unifi South Africa, said: “Ordinary South Africans are looking for ways to make ends meet, and for many people, this includes considering loans or borrowing money from credit suppliers.”

If you have a loan, here are five tips to help take the stress out of paying it back.

Set up a budget and stick to it

Tyrone Lowther, Head of Budget Insurance, said that whether a person is trying to get out of debt or save money, basic budget is an underestimated tool for helping people gain control of their finances.

If you have never set up a budget before, this is what you need to do:

– List all of your essential expenses, such as rent, petrol and food, as well as loan installments and bills like insurance premiums and school fees

– Total the cost of your expenses

– Then deduct your total expenses from your salary amount

– Put any extra money towards your loan repayments or savings.

Get a side hustle

If you find that your salary does not stretch far enough, then start generating extra income by starting a side hustle.

“Gigging or having a side hustle that you do in your free time while holding onto your day job is a great way to make some extra money. Side hustles can provide much-needed financial relief in these difficult economic times,” Therése Havenga, head of Business Transformation at Momentum Investo, said.

Every extra rand or cent takes you one step closer to paying off your loans.

Follow a plan

There are two debt repayment plans people could follow to make the process of paying off a loan less stressful.

Snowball method: With the snowball method, you put all the extra cash you can into paying off your smallest loan first while making only the minimum payment on the bigger loans.

Avalanche method: With the avalanche method, you pay off the installments with the highest interest rates first.

Only borrow from trusted lenders

Pieterse said that when people need to take out a loan, they should ensure that it is from a registered and trusted credit provider. This helps to ensure that they are not burdened with hidden costs or fees.

When taking out a loan, make sure you can afford it in the first place, and determine the amount you can afford by looking at your current income and existing expenses.

Take control of your spending habits

Victoria Reuvers, Managing Director at Morningstar Investment Management SA, said that as people get older, the spending habits that they have learned with their pocket money can spill over into how they budget later in life.

You can take stock of your spending habits by having a clear view of where you are overspending and where most of your money goes.

If you are overspending on non-essentials like takeaways or expensive clothing, then consider going without these luxuries for a few months. Put the money you have on the non-essentials towards paying off your loans.

Take a look at your essential purchases to see where you can save. You can do this by setting up a weekly meal plan and shopping list to make sure you only buy what you need or making lunch at home rather than buying a takeaway.

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