Thank you for your question. First of all, I’m sorry to hear about your job loss. When it comes to paying off debt, certain strategies can be implemented to do so strategically.
Make a list of your debts, starting with the debt with the highest interest rate and ending with the debt with the lowest interest rate.
While repaying the minimum amounts on the debts at the bottom of the list, focus your energy and resources on the most expensive debt in terms of interest.
Because interest will add up the fastest here, it’s a good idea to nip it in the bud and pay it off as quickly as possible. Once that debt is paid off, take the monthly installment you paid on it and add it to the portion of debt that now ranks highest in terms of interest.
Each time you pay off the debt, you will notice that your installment for the next debt increases, as the installments you used to pay off your previous debts will now be concentrated on the next one. This should have a snowball effect and you should be able to eliminate debt faster and faster.
With this method, list your debt according to debt size starting with the highest amount. Again, you’re still paying the minimum on other debt, but focusing your energy on the top-tier debt. This approach will make the big amount seem smaller more quickly, which some people find more motivating.
Making a list of all the debts could be very overwhelming. Regarding your home, if possible, continue to pay the minimum amount if you want to keep the property.
Invest or pay off your debt
Having both debt and savings is a reality for most people, and very few people pay off debt before they start saving.
The key here is to focus on the interest rate of the debt and consider what the potential return on the investment would be. Also, if you have a lot of debt and it is starting to become overwhelming, it would be best to pay off your debt first in order to control your stress levels. Also, keep in mind that having too much debt can make future borrowing opportunities difficult. Also, having too much debt to repay reduces your ability to invest in the future.
Although your mortgage bond is generally a cheaper form of debt, paying off your bond and finding yourself broke while waiting for your UIF payment can be stressful. Remember that you will need to make sure you have cash while you look for another job.
As such, given the considerations above, it would be ideal to strike a balance between managing your stress, settling costly debts and ensuring that you can cover your living expenses until you find a job or until the UIF reimburses you.