Isaac Moledi

Isaac Moledi

Many of us ignore paying our debts hoping that they will disappear.

But with living costs expanding so fast it's time to avoid those dodgy debt techniques that pile up our debt problems.

Here are a few classic dodgy debt techniques that Virgin Money advises we should avoid:

lIf you can't pay the bills, just ignore them.

Denial might sound like a good idea and your preferred method of dealing with things that make life difficult, but in the end it only makes things worse. Ignoring bills result in out-of-control debt.

Empower yourself by opening those pesky envelopes, adding up the amounts and negotiating with your creditors to formulate a plan to pay the debt. This way you control the debt, it does not control you.

lApply for more cards.

Many people have more than one card they use for different functions. But if you have several cards alarm bells should be ringing.

It is easy to lose track of your cumulative debt, build a bad credit record and pay astronomical finance rates, Virgin Money says.

Rather consolidate your debt on the card that offers the best rates. This way you are saving money and it is much easier to keep track of what you owe.

l Pay your one card off with another.

This favourite debt-dodging technique always makes debtors end up in tears, Virgin Money says. This technique might work in the very short-term, but it cannot be sustained.

The company advises you to review all your debt, know what you owe and what you can afford.

So draw up a budget, decide on a realistic amount that you can pay off each month and contact your creditors. Some will even offer you better rates if you ask nicely.

Better still, reduce your cards and, if possible, combine all your debt on the card that will give you the best rate.

l Virgin Money says before making a big purchase without thinking, give yourself a cooling-off period.

After three days, if that grand purchase is still all you can think of and you can afford the payments, then by all means swipe your card.

lBut I am paying the minimum amount ...

This, says Virgin Money, is what MC Hammer, Kim Basinger, Burt Reynolds and Mike Tyson must have thought.

"They all went bankrupt in spite of having fabulous fortunes," Virgin Money says.

The company says it is important to read and understand your credit card statement, know what the balance is and the interest that you are paying.

Most credit cards in South Africa charge up to 30 percent on a negative balance, so it is just not clever to pay those high rates for long-term debt.

Have a plan to pay off the debt as quickly as possible and that means paying more than the minimum amount.