Isaac Moledi

Isaac Moledi

With interest rates on the increase, many people who are over-reliant on credit could find themselves in a debt nightmare come the new year.

At best, they will have to cut back severely on their lifestyle to pay off what they owe. At worst, they will face repossessions and blacklisting.

Old Mutual Bank's Ben Stander suggests that you face up to your debt fears.

Write down your fixed expenses, such as rent, bond repayments or insurance premiums, he advises. Jot down the variable expenses, such as food, transport, rates, cellphone and similar costs. Include entertainment and clothing.

Then write down your fluctuating expenses, such as car maintenance, computer repairs, home repairs and so on. Try to find an average monthly cost for these.

Add all your monthly costs together. If they exceed what you're earning, you're in trouble. And if they're close to what you're earning, with interest rates rising, it could just be a matter of time before you're deep in the debt trap.

Tackle the debt monster. Prioritise. You must pay a bond or rent, and you have to pay for transport and food. See if you can reduce or eliminate things like entertainment and clothing. Consider using the money you've saved by cutting back to pay off debts. Start with those that attract the highest interest rates, such as shopping and credit cards.

If you're still in trouble, speak to your creditors.