What to do with your 13th Cheque?

28 November 2012

If you’re one of the fortunate few that will receive a bonus this year, think wisely before you spend it – this according to Luke Hirst, MD of debt management experts, Debtbusters.co.za.

‘A 13th cheque is not guaranteed and if you are lucky enough to receive a bonus in our current financial climate then use it wisely. Make sure that you have budgeted for January when the bills start pouring in because you want to start the New Year debt free. Abandoning your monthly budget should never be a consideration.’

Hirst reports that 2009 has been a tough one for South Africans –the number of official applicants for debt counselling at DebtBusters has grown by 79% in one year. While Hirst says that it is tempting to go out and spend your bonus on treating yourself. This is the worst thing you can do.

Hirst goes on to say that ‘Using your 13th cheque to reduce your debt burden can help to avoid the vicious debt spiral that many South Africans find themselves in. Be aware however that a monthly budget needs to be put in place to avoid incurring debt again in the New Year. Don’t pay off your debts and then simply begin the cycle again – get out of debt and stay out of it.

If you find yourself under pressure and concerned about debt, Hirst suggest that you “start by paying off high interest rate debt such as your credit card and store cards first or contact a registered debt counsellor who will negotiate with your credit providers on your behalf and design a manageable debt repayment plan that you can afford”.

“In this climate, some creditors will accept settlement offers on short term debt and this could save consumers thousands of rands.”
He adds that if you are lucky enough to find yourself debt free, build up a cash savings amount of approximately 3 months living expenses so that in an emergency you do not have to borrow. Consumers should also shop around to look for the best interest rate.

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