The idea of living by a budget is enough to make many cringe, but for most of us it's a necessity of life. Once you've made peace with this reality, try drawing up a basic monthly budget showing your combined income (such as salary and any benefits you receive) against regular outgoings like bills, entertainment and housekeeping costs. If you’re left with a positive sum each month, that figure should help you decide what kind of loan repayments you can afford - whether you are considering a new loan, or calculating how to pay off existing credit.

If you’re left with a negative figure – in other words, your monthly outgoings are regularly higher than your monthly income - you should think carefully if there are any monthly costs you can reduce or remove altogether. Cutting back on luxuries and non-essential costs in the short to medium term is well worth it if it means you can settle debts and be more financially stable in the long run.

Think you don't have non-essential expenses in your life? How about that take away coffee you have each weekday? Conservatively, let's estimate your coffee costs R15.00 per day, five days per week equals R75.00. There are 52 weeks in a year, two of which you take off from work to be with the kids during school holidays and four more that you take off for travel, sick days, public holidays, family events etc leaving you with 46 weeks of coffee-buying with a price tag of R3450.00. That's a lot of money for coffee when you are eating beans on toast three days a week!

If you are budgeting to work out what you can afford to pay back to existing creditors, try to work out a timeline of which debts you might be able to settle and when, plus prioritise the most important debts and tackle them first.