Struggling with debt? Here are 5 steps to improve your finances.
According to recent statistics released by the South African Reserve Bank (SARB) in its last quarterly bulletin, average South African household debt stood at 72.7% of disposable income. That means that many households in SA are using up to three-quarters of their income to pay off debt, leaving then with only 25% of their salaries to manage their other commitments.
This type of debt can be crippling; it can seem completely impossible to overcome it. However, there are steps you can take to improve your situation. These include:
Get to grips with your debt
You need to know exactly how much you owe each of your creditors. When you’re overwhelmed by the extent of your debt, it can be tempting to ignore the extent of it. However, if you’re going to solve the issue, you need to know the lay of the land. Start by taking the time to figure out how much you need to repay, and at which rates.
Stop taking on more debt
Whatever you do, don’t take any further credit – especially not to pay off the debts you’ve already accrued. This is also a good time to put away any store cards or credit cards you may have. Adopt a ‘plastic money is drastic money’ approach and live within your means.
Work out a budget
Sit down with your household budget and see which expenses you can eliminate. This will require you to differentiate between needs and wants. Needs include rent, fuel, school fees, basic groceries (food, cleaning materials, toiletries), as well as insurance (car, home and health); wants include entertainment, clothing other than the basics, assistance with household chores and garden maintenance, etc. Cut down where you can, compare your big total with your salary and figure out how much you have left over to clear your debts.
Get in touch with your creditors
Get in touch with each of your creditors to explain your situation and try to negotiate lower instalments. In general, creditors are open to receiving smaller instalments rather than nothing at all. As a consumer, you are protected by the National Credit Act, so make a point of reading up about your rights before placing these calls.
Be honest with family and friends
Play open cards with your friends and family; let them understand that you are cutting down on expenses. It will be hard at first, but most people will be supportive once they realise that you are trying to solve a sticky situation.
Do these tasks seem a little daunting? Get in touch with a Libertine Consultants representative to discuss our range of debt services and credit services? Our team of debt experts are here to help you regain control of your finances. Let us help you pave the way to a more prosperous future.
