As we welcome the new year, it's a time of renewed hope and the perfect opportunity to set meaningful goals that can transform our lives.

The beginning of a new year often inspires us to reflect on our past achievements and challenges, paving the way for setting fresh objectives and resolutions. Among these resolutions, the goal to become debt-free stands out as a common and significant aspiration shared by many.

Recent data shows South Africa's debt situation is quite significant, with numerous individuals impacted. According to DebtBusters, as of the second quarter of 2023, there was a notable increase in debt counselling inquiries, indicating a rising concern among South Africans about their debt levels. In fact, the inquiries for debt counselling went up by 43%, and online debt management increased by 99% compared to the same period in the previous year.

Furthermore, the data reveals that South Africans are dedicating approximately two-thirds or 66% of their income to servicing their debt. This ratio is the highest it has ever been. The seriousness of South Africa's debt levels is widespread, affecting individuals from various income brackets.

If becoming debt-free is on your list of resolutions this year, rest assured that you are in good company, as many embark on this journey with renewed vigour at the start of the year. Here are five effective strategies that can help you wave goodbye to debt in the new year.

1. Embrace the Debt Snowball Method

The debt snowball method is all about small wins making a big impact. It works like this: you pay off your smallest debts first while keeping up with minimum payments on larger debts. Once the smallest is paid off, you roll that payment amount into the next smallest debt. This method is great for quick wins and keeping motivation high, as you see debts disappearing one by one.

2. Try the Debt Avalanche Method

If you're more concerned about interest piling up, the debt avalanche method might be more your style. Here, you target the debts with the highest interest rates first. This method can save you money over time, as you're reducing the amount of interest you'll pay overall.

3. Consider Debt Consolidation

Consolidation can be a game-changer. It involves combining multiple debts into one single loan, ideally with a lower interest rate. This simplifies your payments and can reduce the amount you pay in the long run. It's particularly useful for managing several high-interest debts like credit card balances.

4. Develop a Personalised Budget Plan

A personalised budget is crucial for debt repayment. We can work together to assess your income, expenses, and debts, creating a realistic budget that prioritises your debt repayment. Sticking to this budget is key to making steady progress towards your goal.

5. Seek Financial Counselling for Long-term Changes

Understanding the root cause of your debt and changing spending habits is essential. Financial counselling sessions can offer insights into these patterns and provide strategies to help you stick to your budget and avoid future debt.

Embarking on a journey to become debt-free is a commendable resolution. At Succession Financial Planning, we understand that each person's financial situation is unique. That's why we're committed to providing tailored advice and support to help you choose the best strategy for your circumstances. Let's work together to make this year the beginning of your debt-free life.