Debt repayments too high? We Want To Help You!
25 October 2013
In the run up to Halloween you are probably thinking more about what costume to wear to that fancy dress party you’ve been invited to and focusing less on your money troubles. However, between now and the end of the festive season you should be more vigilant about what you do with your money than things that go ‘bump’ in the night, says Angelique Ruzicka.
Here are 13 frightening things that you could be doing right now that will keep you in debt or prevent you from achieving your savings goals:
1. Living above your means: You are over-indebted if money is available after payment of essential expenses is not enough to pay all other debts. “Avoid getting more debt and strive to pay your current debts. You can do this by downgrading and changing your lifestyle. Downgrading does not mean that you will never rise up again, use it as an economic strategy that will assist you to get by until you are back on your feet again,” advises Obed Tongoane, COO of the National Credit Regulator.
2. Ignoring your debt problems: Studies by the South African Reserve bank indicate that household debt is sitting at 75.8% of disposable income. Ignoring your debt problems could mean result in a scary financial future which includes being blacklisted. Having a blemished credit record could prevent you from getting that dream job or home as employers do scrutinise your record before making hires. Landlords look at your record too and could overlook your tenant application if they don’t like what they see.
3. Spending your bonus on frivolous luxuries: You’ve worked hard all year and deserve to splurge that bonus on yourself, right? But this is not the right approach according to Aneesa Razack, head of strategic growth at FNB Investment Products. “A 13th cheque or bonus is a great opportunity to settle expensive debt and make a start toward savings for emergencies, your children’s education or retirement,” says Razack.
4. Not budgeting: So many people just live from day to day without looking at their spending habits and making sure they can survive the month. Take control now and create a budget that you can stick to.
5. Not saving in advance: Scraping together what little money you have left at the end of the month is not a good way to save. “It’s important to change this mindset to rather set aside savings earlier on as usually there’s little left at month end,” explains Razack. Rather save by doing a scheduled transfer into your savings or investment account so that money will be automatically transferred before you have the time to decide on how to spend it.
6. Investing in only one asset class: The saying goes ‘Don’t put all your eggs in one basket’. You should adopt this mantra when you are saving. Relying on just the income from your home or your savings account is not enough. Ensure you are saving in a variety of assets such as stocks and shares, bonds as well as in local and overseas markets. So should one sector or asset class do badly you can rest assured that the money invested elsewhere has a chance of doing better.
7. Ignoring advice: When it comes to money you may have an idea about how to spend it but less of a clue about where to save it. If you have any doubts rather seek advice than pretend to know what you are doing.
8. Not communicating with your credit providers: “If you are battling with your debts, speak to your credit providers to negotiate lower instalments. Do not wait until you receive final demand letters,” says Tongoane. If you have already spoken to your credit providers and they cannot assist you, contact a registered debt counsellor by contacting the NCR on 0860 627 627 or log on to www.ncr.org.za for a list of registered debt counsellors.
9. Accepting any price: If you don’t shop around expect to keep paying the same if not more as your credit providers, insurers and other institutions you deal with will commonly up their costs every year. It will be up to you to find out if you are still getting the best deal.
10. Not saving for retirement: Retirement may seem like a long way away but have you thought about how much you need to save in order to maintain the quality of life you desire in retirement? Speak to a financial advisor today to ensure that you are on the right track.
11. Ignoring your credit score: These days there’s no excuse to not finding out whether you have a healthy credit record as the first one you get in the year is free. Speak to a credit bureau to get a report today.
12. Not filing your tax return on time: If you don’t file your tax return on time you could be penalised by SARS. Act now to ensure that you are on time and avoid the last minute rush.
13. Using credit when you have cash: Sometimes it’s just so easy to swipe your credit card as you walk from store to store. But are you keeping count of how much you are spending. Do yourself a favour and rather draw some cash ahead of a big shopping spree. Then stick to spending the amount drawn and save
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