MANY consumers start the year with holiday debt. Now is the time to review your finances and start 2016 on a sound financial footing.
“This year is going to be tough on South African consumers due to the volatile rand and increased living expenses. The earlier you get on top of your finances, the better it will be,” said Chris Labuschagne, CEO of FNB Credit Card Division.
Take responsibility for your money
Never pay debt with debt, as it is quite easy to apply for another short term loan or increase your credit limit. This will quickly result in serious financial difficulties, said Labuschag-ne.
Consumers need to realise that the current economic climate is most likely going to result in higher interest rates as well as pushing up the price of goods. This means that debt will become more expensive to pay off.
“The need to spend wisely is imperative. Due to the tough economic climate, companies may cut down or not pay out bonuses,” warned Labuschagne.
Back to the basics
“It may seem simplistic, but it is surprising how many people don’t know what is coming in and going out of their bank accounts,” said Labuschagne.
The only way to ascertain this is to pay attention and carefully analyse your bank statements.
“Without scrutinising your income and expenses, there is no way to really ascertain if you are able to make your monthly payments and where you can cut down.
“Make sure the money that goes out of your account at the end of the month, is less than your income.”
From this you will be able to draw up a budget for the upcoming months.
An analysis will highlight what expenses are necessities X such as bond repayments and upcoming school fees, but it will also show where you should cut down.
- Cutting down on unnecessary expenses is the only way to get on top of debt. Stay at home rather than eating out.) Stay away from shops that may tempt you to spend more.
There are also ways of cutting expenses indirectly, such as making an effort not to use excessive water and electricity so as to bring down municipal bills; or car pooling to save on travel and fuel costs.
“Make sure that every rand you spend in the next few months is spent out of necessity.
“Proactively plan your shopping by drawing up a shopping list,” suggested Labuschagne.
Use alternative spending such as rewards and value-adds
Most service providers will offer some type of value-adds, whether it is your cell phone provider, your medical aid or your bank. Make the most of these rewards to try and stretch your rand.
“Make your money go further by making full use of value-adds. This could mean paying for petrol or groceries or even doing online shopping for back-to-school stationary with your rewards programme and embedded benefits,” said Labuschag-ne.
“These will assist you to avoid making debt to pay for everyday goods.”
Talk to your bank
“Talk to your bank if you think there may be difficulties on the horizon. The sooner you pick up the phone, the better,” Labuschagne said.
“They can assist you to restructure your debt, before you are forced to do so by collectors and attorneys, which may result in you getting a bad credit record.
“The bank may be able to assist you by putting your credit card repayments on a budget plan, or re-looking at the terms of your personal loan.
“Taking responsibility for your money will help you get through 2016 financially.”