Please tell us what exactly is a debt counselor? It’s not like people talk about seeing a debt counselor every day. A debt counselor will be registered with the National Credit Regulator (NCR) and will have done the necessary qualifications and exams. Before choosing a debt counselor you need to ensure they are registered and […]
28 June 2016
Saving is very challenging for most South Africans. Spending money is what we all prefer to do. Too often, we spend beyond our means by using credit that we often cannot afford to repay.
Statistics released by the South African Reserve Bank (SARB) last year confirm that South Africa has one of the worst savings rates in the world. South Africans don’t save for unforeseen expenses and neglect to plan adequately (if at all) for their retirement.
Learning to save is not easy and has to start with a change in your mind set and behaviour. You can save if you follow some of these tips:
- Reduce debt levels through effective debt management practises
- Budget well before you get your salary
- Make sure before the month ends you have some money left to carry over to the next month
- Build a portfolio of assets that retain value (like property)
- Always try to put more into your pension fund and retirement annuities while you are still young
- Avoid spending money on non-essentials
- Ask for expert advice when you need it
Here are three tips on how you can implement some good debt management practices into your life:
1) Educate yourself
Don’t be caught by fly-by-night lenders and their clever marketing tricks. Know your rights and make sure you understand the basics of personal finance. At DebtBusters we are seeing an increasing number of people under the age of 25 who are struggling with debt, with almost 30% of new DebtBusters clients under the age of 30. We believe this is because South Africans lack both the means and the foundations for basic financial management. This paves the way to poor money management and develops bad financial habits later on, such as accruing debt and missing account payments. This inevitably leads to a situation individuals are subjected to more borrowing to repay existing debt and to meet day-to-day obligations.
2) Take control of your personal finances
Preparing a financial plan sounds like a big job. Most South Africans don’t have one. Creating one for yourself allows you to categorise what you want to achieve into short term and long term goals.
- Your short term goals should include paying off unsecured debt like store accounts, credit cards and personal loans. Putting yourself under Debt counselling can be an excellent way of taking control of your finances.
Debt counselling can help you in the following ways:
- Reduced interest rates on your accounts so you pay less
- Legal protection from credit providers
- One monthly debt repayment for all your accounts
- Financial education on how to manage your funds
The DebtBusters Debt counselling process is 100% voluntary and confidential with no obligation. Call DebtBusters on 0869 99 06 06 for a FREE debt assessment or visit http://www.debtbusters.co.za, fill out the free call back form and one of our financial assessors will call you back.
- Your long term goals should include saving for retirement and unforeseen expenses, putting in place the correct insurance cover to protect your income from financial risk and gearing up to purchase assets. Just because you are struggling with debt now, does not mean you cannot start planning your long term goals.
All plans have to start with a budget. A budget is a list of all your income, living expenses and debt repayments. Once complete, you can easily calculate whether or not you can afford to pay for everything from the money you earn and with no dependency on credit. If you can’t, you really should consider debt counselling a one of your short term goals.
The best way to avoid temptations and overspending is by having a budget and a plan. Your budget should be updated monthly and must become a good financial habit. Our financial planners at Insurance Busters are available to help you to prepare a financial plan with realistic financial goals. Give them a call on 0860 99 40 96.
3) Monitor and improve your credit health
If you are serious about owning a house or a car or replacing your car when you exit debt counselling, then you should be working hard to improve your credit health. In order to do this effectively, you should have sight of your bureau data on a regular basis. We recommend you get a new credit report every three months to make sure things are improving and that you are not being ‘blacklisted’ by any creditors that you may not have paid. A credit report tracks your account activity, payments and allows you to see what credit providers see on your profile, including your credit score. We recommend you sign up to Kudough for this service. With Kudough you will have access to a credit coach to help you map out the credit health goals that are linked to your long term financial goals. Your Kudough membership also gives you access to hundreds of discount partners which will also help you to save on expenses. Call Kudough on 0861 127 334 or visit www.kudough.co.za.
Some more tips to help you save everyday
Saving on everyday expenses will help you to free up some cash for your financial plan. Here are a few ideas to get you started:
- Avoid using your vehicle to work every day, consider starting a car pooling service with people who you work with that stay in the same area as you. This saves you on fuel and vehicle maintenance.
- Avoid buying lunch every day at work, rather packed yourself a lunch.
- Be a smart shopper and shop around for best prices – avoid buying extra produce simply because it is on sale or because you have a coupon.
- Reduce banking costs by:
– avoiding the use of ATM’s, it’s cheaper to get cash back from instore checkpoints
– changing your bank account to a Bidvest Bank Account TM to avoid high bank charges
- Save on your electricity bill by:
– turning off lights and appliances when not using them
– ‘Go Green’ by purchasing energy saving appliances and using energy saving bulbs
– switching of your geyser when it’s not in use
If you are struggling with your finances or debt, DebtBusters is here to help you every step of the way. Call our experts on 086 999 0606 or visit our website www.debtbusters.co.za.