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20 November 2014
At DebtBusters, we want you to stay on track with your finances and steer clear of splurging out over the festive season. It is during this time that consumers overspend and end up with no cash at the start of the New Year.
Why do consumers overspend during the festive season?
After a hard year’s work many consumers overspend during the festive season, as they feel the need to reward themselves by purchasing unnecessary luxury items and taking lavish holidays. Retail stores and shopping outlets also run festive season sales during this time which tempt consumers to make impulse purchases, which similarly, can quickly lead to over spending or purchasing on credit.
Follow these tips to make sure you don’t splurge this festive season!
1. Set up a budget and stick to it
A budget is a breakdown of your income and expenses. Sticking to it will prevent you from over-spending.
How to set up a budget:
- List your sources of income and expenses (include necessities and luxury items). Remember to split your expenses into fixed expenses (stay the same) or variable expenses (change every month).
- Set aside some money toward an emergency savings fund (just in case you require extra cash). This should be seen as an expense and will prevent you from having to borrow money or short-pay on accounts for emergencies.
- Add up your income and expenses and then deduct all expenses from your income. If your expenses exceed your income, adjust your budget so that you have enough money for the month (cutting out luxuries and unnecessary expenses).
How to stick to your budget:
- Make sure all necessary expenses are covered before spending on luxury item.
- Include the entire family and make sure the budget is visible and known to everyone.
- Try and cut down on water and electricity usage.
- Make home cooked meals rather than eating out or buying expensive pre-packed meals.
- Contact our sister company, Insurance Busters, to make sure you have the most affordable insurance cover. Call 0861 66 3328 and speak to a consultant today!
The festive season comes every year. If you save beforehand, you will end up having more money to spend towards holidays, festive shopping and purchasing gifts, without affecting your monthly cash flow. You can also use this savings toward any emergency expenses you may have.
Remember, as little as R200 rand a month, invested at 12% per annum, will amount to R33,000 in just 5 years. In your budget, make sure you put aside a minimum amount every month which you can deposit into a savings or investment account.
3. Plan for Jan
With the festive season being so ‘festive’, the last thing we think about is the New Year. The frightening thing is that it arrives the very next month, with school fees needing to be paid and clothing and stationary which need to be bought.
Note: December is a good time to buy your children’s schooling necessities, rather than spending your money on festive shopping. Retailers usually increase the prices of stationary and school clothes after Christmas, during their ‘Back to School’ campaigns. It is a good idea to do all your school shopping in December to plan for the New Year.
4. Use your “Spare Christmas Cash” wisely – get rid of your debt first
If you are fortunate to receive a bonus, handle it with care. Stay disciplined and try to pay off any debts you may have in full. By doing so, you will save on the interest which will accumulate if you just keep paying the minimum instalments. It can be tempting to purchase expensive gifts for the family with your bonus instead.
Rather be smart and pay off your credit cards and debts. You will thank yourself in January, when you do not need to borrow money for school fees or pay back debt.
5. AVOID credit!
Do not take out new credit to pay for holidays or luxury items. Your plan should be to enter the New Year debt free. Credit, no matter what time of the month, should be used mainly for emergencies. Never buy on credit if you know you cannot afford the debt repayments. Interest charged on outstanding credit card debt is extremely high and you will end up paying much more.
6. Enjoy the festivities
The festive season must be celebrated, so do not let debt problems give you unnecessary worries and stress. Enjoy yourself, but do not spend money you do not have. Rather stick to your budget and the money you save can be used for essentials the following month.
If you are already in a ‘debt disaster’, then you should consider debt counselling – a formal and legal process which restructures your debt, so that you can still afford to pay for your living expenses and pay off your debt at a lower instalment every month.
With DebtBusters, you can be rest assured that that you are talking to the AWARD WINNING and most TRUSTED debt counsellor in South Africa.
We will provide you with a way of reducing your debt in 5 simple steps:
- WE can give you a FREE and CONFIDENTIAL credit assessment
- WE can CONSOLIDATE your debt repayments into one affordable monthly instalment
- WE can NEGOTIATE with your credit providers to reduce interest rates and fees on your accounts
- WE can get you LEGAL PROTECTION to stop creditors from hassling you
- WE can get you DEBT FREE and issue you with a Clearance Certificate – CLEAR YOUR NAME
The process is 100% confidential with no obligation, allowing you to opt out, should your situation change.
Do not let your debt end your festive season. Call DebtBusters on 0869 99 06 06 or visit www.debtbusters.co.za and have a consultant call you back.