Debt is rarely one amount. More often it’s a bit owed to a lender, a bit to a family member, something on a salary deduction, an account at a shop, and a balance that’s been there for a few months. When it’s spread across several places, it’s hard to see the whole picture, and that makes it hard to make a plan.
This is a straightforward way to get from “I owe money everywhere” to a plan with an end date.
1. Write it all down
Make one list of everything you owe. For each one, write:
- who you owe;
- how much is left;
- what it costs: interest, monthly charges or fees;
- the minimum payment and when it’s due;
- what happens if you miss a payment.
Include the informal debts too: family, friends, the shop down the road. They don’t charge interest, but they’re still money you have to find.
Seeing the total is uncomfortable. It’s also the first time you’ll know exactly what you’re dealing with.
2. Protect the essentials first
Before you put extra money towards any debt, make sure rent, food, ZESCO, transport to work and school fees are covered. If paying down debt means you can’t get to work, you’ll end up borrowing again.
Use the monthly budget steps to work out how much is really free each month after the essentials. That’s the amount you can use for debt.
3. Pay every minimum, every time
Missed payments usually make things worse. They can add fees, or freeze or close an account you might need. Pay at least the minimum on every debt each month, on time.
If you can’t, contact the lender before the due date, not after. Most would rather agree a plan than chase a missed payment.
4. Choose the order for extra payments
Whatever is left after the minimums goes to one debt at a time. There are two common ways to choose which:
- Most expensive first. Put extra money towards the debt with the highest cost per month. This saves the most money overall.
- Smallest balance first. Pay off the smallest debt first, then move its payment to the next one. You save a little less, but you see debts disappear faster, which helps some people stick with it.
Either works if you keep going. When one debt is paid off, add what you were paying on it to the next one on the list.
5. Stop adding new debt
The plan only works if the total is going down. While you’re paying things off:
- avoid new borrowing except for real emergencies;
- pause any credit you don’t need, including credit facilities, until the plan is done;
- if you must borrow for an emergency, add it to the list straight away and adjust the plan.
Borrowing from one place to pay another can make sense if the new debt costs less, but only if you then stop using the old one. Otherwise you end up owing both.
6. Check progress every month
Once a month, update the list with the new balances. The total should be going down. If it isn’t, find out why: a new cost, a missed payment, or new borrowing. Change one thing and check again next month.
If you can’t cover the minimums
If your income doesn’t cover the essentials plus the minimum payments, more discipline won’t fix it. You need to change the numbers:
- talk to each lender about lower payments or more time;
- look at which costs can be cut, even temporarily;
- look for extra income, even short-term;
- ask your employer whether a salary advance is possible, if that would replace more expensive debt.
If you owe Dottra
If you have a Dottra balance you’re struggling to pay, contact support through the app before the statement due date. Paying any amount reduces the balance used to work out the monthly charge, so even a partial payment helps. If a statement does go overdue, the facility freezes but you can still pay, and it unfreezes once the overdue amount is cleared.
