Many South Africans face money challenges as the month comes to an end. For some, borrowing money might seem like the only way to stretch their budget, especially when unexpected costs pop up. But borrowing from mashonisas — informal loan sharks — can lead to a dangerous cycle of debt with sky-high interest rates and harsh collection methods. The good news? You can manage your money safely and avoid falling into this trap by following some simple but effective financial habits.
Why You Should Avoid Mashonisas and Unregulated Loans
Mashonisas are known for charging extremely high interest rates that can trap borrowers in a cycle of debt. On top of that, many use aggressive and sometimes intimidating ways to get their money back. This makes borrowing from them risky and unsafe.
Instead, if you must borrow money, look for loans from registered financial service providers. These lenders operate under the National Credit Act (NCA), which is there to protect consumers. Registered lenders offer loans with clear terms and reasonable interest rates, giving you more control and safety over your finances.
Smart Borrowing: How to Borrow Responsibly
Sometimes borrowing is necessary. But if you do need a loan, here’s how to do it safely:
Choose loans with fair interest rates. Avoid quick-cash loans with excessive fees.
Pay off your loan as quickly as possible. The longer you take, the more interest you will pay.
Only borrow what you really need. Don’t borrow money to cover non-essential expenses.
By being careful and strategic about borrowing, you protect yourself from falling into a financial hole.
Managing Your Money to Avoid Loans Altogether
The best way to avoid dangerous loans is to take control of your money before you run into trouble. Here are practical ways to manage your money so you don’t need to borrow:
1. Create a Budget and Track Your Expenses
Make a simple money management system. Write down how much money you earn each month and where every rand goes. Separate your spending into:
Essentials: Food, rent, electricity, transport
Non-essentials: Extras like eating out, airtime, entertainment
Once you see exactly where your money goes, you can find ways to cut costs. For example, you might:
Shop at cheaper grocery stores or markets
Share transport costs with friends or family
Reduce unnecessary spending on airtime or snacks
2. Build an Emergency Fund
An emergency fund is money saved for unexpected expenses, like a medical bill or urgent home repair. If you have this fund, you won’t need to borrow when something unexpected happens. Start small — even R100 or R200 a month adds up over time.
3. Use Cash or Debit Cards, Not Credit
Credit cards and store cards might seem convenient but can lead to debt if you don’t pay the full balance monthly. Using cash or debit cards linked to your savings helps you spend only what you have.
If you use credit cards, always aim to pay the full amount on time to avoid interest.
4. Increase Your Income
If possible, look for ways to earn more money. This could be through part-time work, selling goods, or learning a new skill to get better job opportunities. More income means more breathing room in your budget.
Handling Existing Debt the Right Way
If you already have debts, especially high-interest ones, it’s important to manage them carefully to avoid them growing out of control.
Focus on paying off the principal first. This reduces the amount you owe and the interest you pay.
Pay off expensive debts first. Credit cards and mashonisa loans usually have the highest interest rates.
Talk to your creditors. If you are struggling, ask for a payment plan or breaks so you don’t fall behind or damage your credit.
Close accounts once paid off. Cancel credit or store cards so you aren’t tempted to borrow again.
Taking control of your debts can reduce stress and help you get back on track financially.
Plan for Long-Term Financial Health
Avoid risky financial behavior like gambling or making investments when you are still in debt. Focus on clearing your debts first.
Also, plan ahead for challenging times, such as month-end or festive seasons, by budgeting carefully and saving ahead. This can prevent money worries and reduce the need to borrow.
Final Thoughts: Breaking the Cycle
Avoiding mashonisas and unsafe loans is possible with good money habits. By managing your budget, building savings, borrowing responsibly, and handling debt carefully, you can keep your finances safe and steady.
Start with small steps today to create a more secure financial future — one where month-end money worries don’t control your life.
Check also: Loan Sharks in South Africa: How to Identify, Avoid, and Escape the Debt Trap
