If one makes a loan and the interest rate is said to be 32% per annum – (compounded monthly). What exactly does that mean? How is this calculated monthly? The key is to look at the APR rate, as that gives the true interest rate. There are many methods of calculating interest, but most will […]
27 November 2012
If you spend more than you earn you will end up getting yourself into debt. This not only puts strain on you financially but also enormous strain on your family and friends.
As the end of the year is drawing closer now is a good time to take stock of your financial situation and make some changes. You can start the New Year with a new attitude to your spending and improve your situation!
The first thing to do is to compare your spending to your income. Here comes the real measure of the state of your finances: Figuring out how your total spending compares to your total household income. You may be in for a shock. Are you ready?
Getting together what you need to start:
You will need a pen and a notebook and also a calculator. Also gather the following financial documentation to assist you:
• Cheque books
• Bank statements
• Credit card statements
• Store card statements
• Salary slips for the previous 12 months / if you are self-employed your business records showing cashflow.
Your spouse or partner should gather up the same information because the goal of this exercise is to give you as complete a picture as possible of how your household spending compares to your household income.
Doing the sums
Once you have all the necessary documentation to hand sit down and add up all your monthly outgoings and make a list. Alongside this list your monthly incoming salary / any other money that comes into your account.
Should the outgoing amounts exceed the incoming amounts you need to try and work out ways to cut back / reduce expenditure. Ways to do this include shopping for food once a week and make shopping lists with what you need as opposed to shopping daily where you will end up purchasing extra items you don’t really need. Turning off your geyser when you are not at home/on holiday will save you money and also switching off any plugs that are not in use – examples are toasters/TV’s/cell chargers.
Once you have worked out ways to reduce your outgoings if the amount is still higher than your incoming salary you need to consider other options to assist you in getting out of debt.
DebtBusters have numerous options available to you. Please do not hesitate to contact us on 0869 99 06 06 or visit our website www.debtbusters.co.za.