Cape Town – The latest data released by the National Credit Regulator (NCR) is deeply troubling for the South African consumer and the economy in general, according to Ian Wason, CEO of DebtBusters. “There seems to be no sign of a reversal of the average consumer’s finances, with more and more South Africans falling into […]
23 January 2014
Angelique Ruzicka speaks to Michelle Dickens managing director of registered credit bureau, TPN about how consumers can get their finances in order in 2014.
Last year there were plenty of calls to consumers asking them to spend wisely during the festive season and to not overdo it. However, we all know that following this advice can be tricky, particularly when you know Aunty Mavis has gone all out to buy you that perfect gift. You want to reciprocate and if you, like I did, had a baby then it’s really hard not to spoil them especially if it’s their first Christmas.
If you did overdo it with the spending it is possible to set yourself back on the right path. But there are several things you need to do first. Michelle Dickens of credit bureau TPN has the following ten practical tips on how to build a good credit record and strategies to adopt to ensure you don’t end up blowing the budget:
- If you don’t have a credit record then unfortunately you need to open a credit facility of some kind. “Open a store account or a credit card with a low credit limit. If you have no credit record at all, financial institutions don’t know whether you’re a good risk. They’ll charge more until they have a better sense of your credit behaviour,” says Dickens.
- Take up window-shopping. “It’s just as much fun as real shopping, and a whole lot cheaper. Research shows that most of the pleasure in shopping lies in anticipation – not the actual purchase,” says Dickens.
- Be disciplined by paying off the amount owing on your credit cards in full every month. “Also, never use your budget facility if you can help it,” advises Dickens.
- Look out for bargains. “Again, focus on what will really add value to your life. Sometimes one or two classic, quality items that you wear for years are a better bet than lots of cheaper, disposable fashion,” says Dickens.
- Ensure that you have a roof over your head by paying your rent or mortgage in full every month.
- If you are renting, look after the property. “Do not damage your landlord’s property – and if an accident happens, ensure that the damage is rectified or it will reflect on our database,” says Dickens.
- Save so that you aren’t caught out by the unexpected. “Put enough savings to cover your living expenses for six months should you lose your job,” advises Dickens.
- Invest in a savings product like a retirement annuity. This will force you to put money aside for savings even when you’re tempted.
- Never buy non-essentials like holidays on credit. Rather save up and pay cash.
- Pay off big purchases like a car over a shorter rather than a longer period. The longer you take to pay something off, the more it will cost you in the long run.
Remember to always work to a budget to ensure that you keep an account of the money you spend and save. If you don’t you could be in danger of ending up in a debt spiral.
To find out just how credit fit you are, take the quiz at Getcreditfit.co.za. The Get Credit Fit initiative is a project aimed at educating and empowering South Africans on how to take charge of their credit behaviour.