Debt is a tricky concept to understand at the best of times. Though it seems easy to pay off a large purchase in small instalment, often times the interest charged results in the consumer paying more than the value of the product. And often times these little instalments can snowball into an exorbitant chunk of change that starts eating into your living expenses.
The definition of debt free changes depending on the individual. Traditionally it means that the consumer does not owe any money to any creditors. However certain expenses that have become essential, such as rent, mortgages, and car payments are also classified as debts and it depends on how the consumer views their debt situation.
The focus of debt free living should be on credit cards, store accounts and small loans, and every attempt should be made to pay these off as soon as possible. Funnel extra money into these accounts, it may feel like a big expense now, but the savings in the long run will prove worth it. Once these have been settled and only the larger the debts remain, start paying off the capital using the now freed up money.
Ultimately debt free means owning everything without any outstanding payments on it. Do not be afraid to ask for advice or help on the way to a debt free life, it can only secure your assets and future.
Article written by: Andrea van Tonder 02-2013