In the third quarter of 2024, consumer debt applications surged to a record high of 18.1 million, a 3% increase from the previous quarter, according to the National Credit Regulator. This trend underscores the financial pressures many consumers face, often leading them to seek credit to manage rising expenses. To avoid falling into the debt trap, a practical approach is essential.

1. Rank Your Debts by Interest Rate

Start by listing all debts and ranking them from highest to lowest interest rates. This typically includes:

– Credit cards (often with the highest rates)

– Personal loans

– Car loans

– Student loans

– Mortgages (usually the lowest)

2. Targeting Strategies

– High-Interest Debts (e.g., Credit Cards): Focus on paying these off first. Consider the avalanche method, where you direct any extra funds toward the highest interest debt while maintaining minimum payments on others. This saves money on interest over time.

– Medium-Interest Debts (e.g., Personal Loans): Once high-interest debts are managed, allocate extra payments to these loans. Refinancing might be an option if lower rates are available.

– Low-Interest Debts (e.g., Mortgages): While these are generally manageable, continue making regular payments. Consider making extra payments to reduce the principal, which can lead to interest savings over time.

3. Build an Emergency Fund

Simultaneously, work on building an emergency fund to avoid future reliance on credit. Aim for three to six months’ worth of expenses.

4. Educate Yourself

Enhance your financial literacy by utiliisng resources such as budgeting apps, financial workshops, or online courses. Understanding personal finance can empower you to make informed decisions.

By implementing these strategies, consumers can effectively manage and reduce their debt, fostering a healthier financial future.

As South Africans think about the effects of U.S. policies under President Trump, the idea of investing money overseas becomes a hot topic.

The Upside of Investing Offshore: 

1.Spreading Risk: Investing in other countries can help protect South Africans from local economic troubles, making their investments safer.

2. New Opportunities: Offshore investments allow people to tap into markets and industries that aren’t available in South Africa, which could lead to better profits.

3. Currency Protection: Putting money into foreign currencies can help safeguard against the South African rand losing value, keeping wealth intact.

The Downside of Investing Offshore:

1. Complicated Rules:Dealing with foreign taxes and regulations can be tricky and may lead to unexpected issues.
2. Extra Costs:Investing overseas often comes with additional fees, like management costs and currency exchange fees, which can eat into profits.
3. Less Connection to Home: Investing abroad might make it harder to stay informed about local economic changes, leading to missed chances in the South African market.

In summary, while investing overseas can provide good protection against changes in the U.S. economy, it’s important for South Africans to consider the potential downsides before making any moves.