How to avoid starting January with more debt

Right now, the best thing you can do for your financial health is to plan for December and January.

In most cases, when people write to us with financial difficulties it is because they have failed to plan.

We live in a world that is geared towards immediate gratification and the misplaced belief that things will sort themselves out. We make impulsive spending decisions with the hope that the “future me” will have figured out how to pay for it.

Given the expectations around the festive season, the impulsive spending and I-deserve-it mantra are at their peak, combined with the payment of early salaries as companies close for the December break.

Receiving your salary early at a time when you are most tempted to spend is a recipe for disaster, which explains why pay day loans spike in January.

While it is a great feeling to receive money early, remember that it has to last you until the next pay day – which is 40 days away.

You must still make provision for end-of-December bills and January expenses.

The feeling of Januworry is simply because people have not budgeted correctly and realise that they do not have the required money to meet day-to-day spending for the whole month, let alone those extra bills such as school fees and uniforms.

This year, do things differently.

Make it a goal to start the new year without additional debt. Before you spend, pay all the end-of-month bills as soon as you are paid. An early payment into your mortgage or vehicle finance has the added benefit of saving on interest.

If you have debit orders which you cannot change, calculate how much you need to keep aside. Make provision for January day-to-day expenses such as groceries and transport, and back-to-school expenses.

Go as far as putting the money into a savings account linked to your bank account to keep from spending it. Just make a note to transfer the money back into your transactional account before the debit orders are due.

If you receive a bonus, you could use it to pay for your child’s school fees for next year or to pay for major repair expenses on your car, for example. Planning ahead and knowing what expenses you need to meet will help keep you out of debt.

If you are feeling tempted to spend, close your eyes for a moment and think about how you will feel starting January with a savings account that actually has money in it to pay those January expenses.

I promise you, it will be a feeling far more powerful and positive than that which spending money will give you.


1. Pay your smallest debt and then snowball: Take your smallest debt, pay it off and close the credit facility so you are not in the same situation next year. Make a promise to yourself to not use that credit facility ever again.

Take the installment you were paying to that loan and add it to another debt repayment so that you pay off that debt sooner. Keep doing this until all your debts are paid off. This is known as the “snowball effect”.

2. Start/boost your emergency fund: One of the main reasons we fail to pay off debt is because of emergencies.

While trying to pay off our credit cards an emergency forces us to use them again. Aim to have at least R10 000 in a savings account and add to it every time you receive a bonus.

The goal is to have three months’ worth of living expenses saved.

3. Start a tax-free savings account for long-term savings: Many tax-free savings accounts, such as those offered by SatrixNow, have no minimum deposit, so you can start with as little as R100.

If you invested a bonus or tax refund of R5 000 each year, it would be worth around R360 000 in 20 years.

4. Pay less tax: Many people are surprised to see how much tax they end up paying on their bonus, especially if it pushes them into a new tax bracket.

  • You can save tax and boost your retirement provision by investing up to 27.5% of your bonus tax-free into your company retirement fund or personal retirement annuity.
  • You can give in the spirit of the festive season and receive a tax break.
  • You can donate up to 10% of your taxable income to any registered public benefit organisation and receive a full tax deduction.


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