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 […]
8 February 2016
Brandon Williamson, a 32-year-old Paramedic, joined DebtBusters on the 19th of September 2012. Brandon was not taught how to manage his money correctly by his parents or at school and developed a spending problem. He would run up his credit card each month to an amount he could not afford, due to eating out at restaurants, buying expensive clothing and spending without thinking it through first. Adding to his costs, two years ago Brandon and his girlfriend had a child and he is currently accountable for paying crèche fees and other child related expenses.
Brandon was sent personal loan letters and was constantly offered store cards. In order to finance his lifestyle, Mr Williamson began to borrow money from the bank and purchase items on credit. Brandon further lost track of what he was spending, as he had no set monthly budget to follow. As interest rates on his current debts began to pile up, Brandon had to take out more bank loans in order to service his existing debt, and, therefore, fell further and further into debt.
DebtBusters expert financial consultant took a look at Brandon’s budget in order to analyse his income and expenses and to see where he can cut costs and save money on a monthly basis, so that he can take back control of his financial situation and start spending his money wisely. Brandon had a Total Income per month of R15, 292.50. However after taking into account all of his monthly salary deductions, he was left with a net income of R11, 373.18 per month. Brandon’s monthly expenses amounted to R8, 423.18.
Below was Brandon’s budget:
|Gross Salary||R15, 292.50|
|Other deductions||R 482.78|
|Life Insurance pension||R300.00|
|TOTAL EXPENSES||R8, 423.18|
|TOTAL AMOUNT AVAILABLE FOR DEBT REPAYMENTS||R2, 950.00|
Brandon, fortunately, had no secured assets such as a house or vehicle and, therefore, he only had unsecured debt repayments to make each month. His debt was made up of 6 unsecured accounts.
After assessing Brandon’s budget he only had a total of R2, 950.00 left at the end of the month to pay off his debt repayments, still his Debt repayments were a greater amount of R6, 477.97 each month. This confirmed that Brandon was in arrears on his debt repayments and did not have enough money to pay his debt.
Thereafter, a DebtBusters negotiator started the process of liaising with Brandon’s credit providers and managed to successfully negotiate new interest rates on all of his unsecured debt accounts. DebtBusters devised a new debt repayment plan for him by ensuring that he paid lower interest rates, over an extended period of time.
The following budget is a comparison between Brandon’s previous debt repayment amount and his new monthly instalments once under debt counselling with DebtBusters:
|Credit Providers||Original Annual Interest rate||Monthly Debt instalment before debt review||New agreed annual Interest Rate||New Monthly Instalment|
|Bank loan 1||31.00%||R3,238.73||0.31%||R1,757.08|
|Bank loan 2||32.10%||R650.25||0.32%||R292.35|
|Bank loan 3||21.75%||R517.55||0.26%||R196.96|
|Credit card 1||19.50%||R633.75||0.25%||R187.90|
|Retail account 1||26.00%||R341.14||0.28%||R113.88|
|Micro loan 1||60.00%||R1,096.55||0.47%||R132.75|
After negotiating with his credit providers, DebtBusters managed to successfully save Brandon R161,329.35 in interest rate charges and fees, by reducing his monthly debt instalment from R6,477.97 to R2,680.92. After signing up for Debt counselling, Brandon is now able to afford his debt and will be debt free and stress free within less than 60 months.
Now that Brandon is under the debt counselling process, he can no longer purchase items on credit and only buys what he needs on a monthly basis and not what he wants.