5 Important things to teach your children about debt & lending

Being a parent in the 21st century can be a tough nut to crack. Our children are growing up exposed to countless media channels, which means it is vital that we lay the groundwork for proper understanding of life skills such as financial planning, so they are able to make sound decisions despite the constant marketing onslaught.

The difference between needs & wants

Start with the basics. Teach them to differentiate between needs and wants. They need a school uniform, a book bag, stationary, etc. They want movie tickets, brand-name clothing, money to spend at the fair, data for their phones, etc. Sometimes you’ll find that a want could actually be a need, i.e. a fitness tracker that inspires them to move more, tells the time, keeps track of their sleeping habits, etc. Open the lines of communication and encourage dialogue in this regard. The more you chat about it, the easier it will become for a child to determine the difference.

How to live within their means

This is mainly a case of show, don’t tell. You can’t expect your children to be frugal with their money if you aren’t being so with yours. A good way to do so is to involve them in the monthly family budget. Get together around the table and plot out what needs to be bought and paid for throughout the month ahead. This way they will also develop an appreciation for where your income goes, and the choices they will have to make as adults.

To keep track of income & expenses

Once your kids have a basic understanding of what a budget is, you can ask them to help you keep track of income and expenses. Start small, with their own pocket money and how they spend it. Eventually, it can become a part of their chores (and math exercises!) to keep track of your receipts so you can tally up your household expenses at the end of the month.

Not all credit is bad credit

Discuss the notion of good debt and bad debt. Explain that taking out a loan to finance a house or to pay for education is something vastly different than doing so to cover day-to-day expenses or to cover credit card payments, for instance.

Save, save & save some more

Teach your children the value of compound interest by giving them the option of ‘investing’ some of their pocket money with you throughout the year at a very attractive interest rate. Then, when the December holidays roll around, you can pay out their dividends accordingly. This is a simple way to show them how satisfying and rewarding it can be to save your money diligently.

By laying the groundwork for wise financial decisions early in their lives, you will equip your children with the building blocks of a prosperous future. Keep an eye on the blog in coming weeks and months as we share more insider info on making your finances manageable. In the meantime, feel free to reach out to a Libertine Consultants representative if you would like more information regarding our debt services and credit services.

How stay-at-home parents can safeguard their financial wellbeing

When you’re happily married and placing your career on the backburner to take care of the children while your partner pushes their career boundaries as the main breadwinner, difficult discussions about financial responsibilities are something we tend to sweep under the rug. After all, who wants to come home after an exhausting day at the office to answer a slew of questions about how the household finances are managed and what would happen if divorce becomes a reality? Pretty much no-one

Put your agreements on paper

You may have a marriage contract, but do you have a domestic finance contract? If it is decided that your career has to take a backseat, you need to discuss how you will be compensated for your sacrifice. Will you be given a monthly allowance? Or are you allowed access to the shared account to cover expenses? Will you be going back to work at a later stage or taking refresher courses to stay up to date with your industry? Put these things in writing.

Insist on access to the household finance reports

When you receive an allowance from the main breadwinner of the family, it’s easy to be left in the dark where the rest of the finances are concerned. Is your partner making investments without your knowledge? What are your shared and separate assets? If the worst should happen and your partner should die, or you should get divorced, these are things you need to know. Similarly, you should be invited to meetings with the family’s financial planner. Every decision regarding money should be fully transparent.

Don’t fall out of touch with your industry

Read up, take distance courses, keep your contact list fresh and up to date. Don’t depend on the fact that your partner will be bringing home the bacon forever. They could take ill, or you might decide to move on. In these cases, you should be in step with your peers, so you can slot back into your chosen industry with ease.

Following these guidelines will place you in a more secure position when it comes to managing your own finances. No-one likes to expect the worst, but it always pays to be prepared. If you feel you are currently out of the loop, it’s time to ask your partner to put you on an even keel with themselves. A marriage is a partnership, and when you’re the one bearing the brunt of the day-to-day domestic responsibilities, it’s your right to know what is going on. Exercise this right and inform yourself – knowledge is power, and you deserve a seat at the table where your household finances are concerned.

Unexpected road expenses to consider when calculating your budget

At Libertine Consultants, a part of the debt counselling services we provide includes sitting with our clients to determine what they’re monthly expenses are. Something we’ve noticed of late is that many consumers tend to underestimate their transport expenses. So, we thought we’d share a few of the hidden costs you may not be considering when budgeting for the month.

Here are a few of the transport-related things our clients often forget when drawing up a budget:

Unexpected fuel price hikes

Whether you own a car, take a taxi to work, or make use of a bus, unexpected fuel price hikes will affect your bottom line. Fares and ticket prices increase, and if you don’t factor in a margin of error in your fuel budget, filling up your car can suddenly become a big headache. When VAT was increased earlier this year, it affected industries across the board and fuel prices skyrocketed. Consumers who were not ready to absorb that increase were at risk of using debt facilities to pay for a day-to-day expense, which is one of the things we warn against.

Toll fees

SANRAL toll fees are another aspect of transport budgeting that should be considered if you own a private vehicle. If your daily commute takes you along a tolled route, you have to bear in mind that these tariffs may also be increased without warning. Always leave a little wiggle room in your budget to accommodate these increases.

Parts replacement

Picture this. You take your car in for its annual service, expecting a bill of around R2000 for the standard service and consumables. When you arrive at the dealership to pick up your car, the technician informs you that you have to replace the rear brake system completely at a cost of almost R6000. If you don’t have some auto-related savings tucked away, this is bound to catch you completely off-guard. And if you choose not to do the repair you will be taking to the road in a vehicle that is unsafe for you and your family.

The best way to keep ahead of expenses like these is to put away a set amount every month especially for auto services and repairs. Whether you do it as a part of your overall savings, or put it aside in a separate interest-bearing account, there will come a day when you will be happy that you did.

These are a few of the things you need to consider when budgeting for your transport needs. Keep an eye on the blog in coming weeks and months as we share more helpful advice on paving the way to a financially prosperous future.

The ABCs of clearing your credit record

This is the fourth and final blog in our four-part series on clearing your credit record in South Africa. If you’ve been keeping an eye on the blog over the last few weeks, you are now all caught up on the role your credit record plays in determining whether you are a sound investment for financial institutions who extend credit to SA consumers. We’ve discussed the role of credit bureaux in determining your overall credit score, how a credit record differs from a credit report, and what a good credit report should look like.

What causes a low credit score?

If you have any of the following against your name, it could result in a low credit score: Accounts in arrears. If you have been late paying certain accounts, this reflects negatively on your ability to stick to payment terms.
Default accounts. These are accounts that have been handed over to collection attorneys after an extended period of being in arrears. Skipped payments. Paying on time one month, and then skipping the next also affects your credit score badly – it is seen as erratic payment behaviour. Judgments. If you have judgements against your name pertaining to default accounts, your credit score is likely to be affected negatively. Administration. If you have been placed under estate administration to manage your finances, this will result in a lower credit score. Debt review. If you currently are under debt review, it will reflect negatively on your credit score. Credit providers are not meant to extend any credit to individuals who are in the process of clearing their debt, so debt review is flagged as an issue.

However, once your debt is paid off in accordance with the agreement the debt review agency put in place with your creditors, your credit score will be improved.

What can I do improve my South African credit score?

The first step to improving your credit score is knowing your credit score. Then, there are a few straight-forward, although by no means simple, steps you can take:

Pay the entire instalment amount on outstanding accounts every month. Keep your use of your existing credit facilities under 35% of the limit (e.g. if you have R1000 credit, never go over R350). Take steps to remove publicly available negative information, such as judgements and administration orders, from your report by paying off all your outstanding debt. Establish a strong credit history by maintaining moderate use of credit such as store accounts, loans, etc. and paying it off in a dependable fashion. Don't sign up for too many sources of credit at any given time - it reflects badly on your financial situation even if nothing is wrong. Check your credit score regularly to see if everything looks right. If it doesn't, contact the credit bureau to dispute any inaccuracies.

This concludes our four-part article on the ABCs of clearing your credit record in South Africa. Keep an eye on the blog in coming weeks and months for more helpful advice on debt management.

In the meantime, feel free to contact a Libertine Consultants representative directly if you have any questions about our credit services. We're happy to assist you with drawing your credit record, analysing it and providing step-by-step support to improve your South African credit score.

The ABCs of clearing your credit record (Part 3)

If you’ve been keeping an eye on the blog over the past few weeks, you’ll have noticed that we are discussing where your credit record fits into the procedures South African financial institutions follow when determining whether you are a suitable candidate for credit or not. At Libertine Consultants, evaluating their credit report, is the most important starting point for each one of our clients – whether for a simple enquiry, a clearance issue or to determine if someone really needs debt review.

We really know our stuff when it comes to our clients' credit reports!

In previous articles, we discussed the role of credit bureaux in determining your overall credit score, and how a credit record differs from a credit report. Today we look at the main features of a good credit report.

What is my credit score & does it matter?

Your credit score is the number a credit bureau allocates to your profile. Think of it in the same way as the grades you got in school. In school, a good grade meant you understood the course work and spent enough time studying. In life a good credit score means you have been managing your finances in a way that shows potential credit providers that you pay off your debt consistently.

Do credit providers look only at the credit score?

Each credit provider has its own inhouse system for calculating the consumer's risk profile. Your credit score is considered, but the following also influences their decision:

Your employment history

Your income & affordability assessments

The type of credit and how much you're applying for.

This, along with other aspects of your credit profile, ultimately determines whether they extend credit to you or not.

What is a good credit score?

Every credit bureau uses its own unique criteria and algorithms to calculate your credit score. Below is a summary of the scoring parameters for each of the 4 major credit bureaux in South Africa. The general rule of thumb is simply that higher (anything above 700) is good and lower (anything below 600) is poor:

TransUnion Credit Bureau (American based) GOOD = 918-999 POOR = 0-635

Experian Credit Bureau (European based) GOOD = 77-999 POOR = 0-486

Compuscan Credit Bureau (South African) GOOD = >667 POOR = <605

XDS Credit Bureau (South African) GOOD = >900 POOR = <560

It can sometimes happen that your credit record contains faulty or outdated information that is affecting your credit score negatively. With a negative/poor score you might find that your credit applications are consistently rejected. But, with the help of the experienced team at Libertine Consultants, this incorrect information can be disputed, the outdated information removed, and your credit score rehabilitated!

Your credit score restored

Now you know all about a good credit score!

Our next article will look more closely at what causes a low credit score and what you, the consumer, can do to improve your credit score.

In the meantime, contact a Libertine Consultants representative at any time with any questions you may have regarding our credit services. We're happy to provide any information you may need about your credit record and help you improve it to bolster your overall financial standing in South Africa!

Read more about credit bureaux in Part 1 and credit records in Part 2 of our 4 part series.

The ABCs of clearing your credit record (Part 2)

If there is one thing that the Libertine Consultants team excels at, it’s helping our clients to improve their credit records! We have helped countless over-indebted South African consumers to properly manage the repayment of their debts. By fostering healthy repayment habits, their credit rating has improved significantly. But how does it all work exactly?

In our previous article, we discussed the role of credit bureau in determining your overall credit rating. Today we are discussing your credit record and how it differs from your credit report.

What is a credit record?

You may be wondering why you have a credit record, after all, you never signed up for one, right? This is a valid question. Your credit record is the tool credit providers and potential lenders use to track your previous repayment habits. They must know whether it is risky to give you credit or lend you money. As such, when you apply for any form of credit (i.e. home loans, study loans, buying furniture, opening a clothing account), the credit supplier will get in touch with one of the credit bureau that operate in South Africa.

Through the credit bureau they have access to the information on file regarding how you previously managed your credit. What they need to make sure of – before giving you credit – is to see whether you paid on time, whether you skipped any payments and whether you generally complied with the repayment agreements with other businesses that have extended you credit.

What is a credit report?

A credit report is the organized version of your credit information supplied to potential credit providers by a credit bureau. The following information appears on the report:

Your identity (name and ID number)

Address and how often you moved from one residence to another

Occupation and employment record

Marital status and number of dependents

Any accounts in your name and the balances thereof

Whether you have paid your accounts fully or if you have defaulted

It indicates which credit providers have taken action against you and the kind of action that was taken

Whether you have ever declared yourself bankrupt

Whether you have volunteered to be placed under debt review

All this information gives a potential lender a good overview of the type of payment behaviour they can expect if they were to extend you credit.

However, it often happens that outdated information still reflects on your credit record. This information, although outdated and incorrect, will deem you – in the eyes of a credit provider – unsuitable for extending credit to.

This is now where our skilled, pro-active Libertine team steps in to ensure that your record is brought up to date. All outdated and incorrect information is removed and once the credit bureau have updated the information, you credit rating will improve within days!

More articles coming

This is a concise summary of credit reports and how they are compiled. Look out for upcoming articles that will explore what a good credit report looks like and what you can do to improve a low credit score.

In the meantime, feel free to get in touch with a Libertine Consultant representative if you want to discuss your credit record in person. We offer a range of cost-effective credit services that have been tailor-made for consumers who want to address their credit score and pave the way to a financially prosperous future.

The ABCs of clearing your credit record (Part 1)

At Libertine Consultants, we receive questions about credit records every day. We are often contacted by people who have taken out many loans and made a lot debt and are now unable to get any credit because of a poor credit record or blacklisting. But what does it mean when you have bad credit or a low credit score? And what can you do when you have a negative listing on your credit record and want to clear your name?

To make it as simple as possible, we’re going to break this rather complicated matter down into four questions and provide answers to each one in a series of four separate articles:

What is a credit bureau & what do they do?

What is a credit report & why do I have one?

What does a good credit report look like?

What causes a low credit score & what can I do to improve mine?

What is a credit bureau?

A credit bureau is a business that monitors and records individual consumer credit activities. It is sometimes called ITC, because that was the only credit bureau in South Africa for a long time. Today there are four main credit bureau that have been approved and registered with the National Credit Regulator (NCR) in South Africa. They are:

TransUnion Credit Bureau (based in America)

Experian Credit Bureau (based in Europe)

Compuscan Credit Bureau (based in SA)

XDS Credit Bureau (based in SA)

What does a credit bureau do?

These businesses provide credit providers or potential lenders with an idea of how you manage your credit. They do so by calculating your credit score based on a variety of factors. In short, they capture, update and store your credit history based on your financial activity. If you've managed your debt well, i.e. you pay it off consistently without missing payments, your credit score will be good. To lenders, you will seem like a safe borrower. On the other hand, you appear risky and credit providers are less likely to provide you with credit if your payment history shows that you often miss a monthly payment and fall into arrears.

The good news is that you can change your credit score by improving the way you handle your money. There are ways to show the bureau that you have become more responsible. It takes some time, but if you do it right, your credit report will look a lot better and you will eventually be able to get credit again. At Libertine Consultants, we will give you advice on how to do this.

More about your credit report

Look out for our next three articles that will take a closer look at your credit report, what a good credit report should look like and what you can do to improve a negative credit score. In the meantime, feel free to contact a Libertine Consultant representative directly if you have any questions about credit clearance. We're happy to provide any assitance and information you may need!

What is prescribed debt & how does it work?

One of the credit services we provide at Libertine Consultants is credit clearance. This often includes helping our clients clear prescribed debt from their credit records. But what exactly is prescribed debt, when does it apply, and does it really mean you don’t have to pay an outstanding debt?

Prescribed debt defined

In short, prescribed debt is old debt that has not been acknowledged over a period of three years. If a credit provider does not demand payment from you, start legal action against you or communicate with you in any way for three years, a debt becomes prescribed. That means the debt is essentially cancelled and the credit provider loses his right to claim payment on the debt ever again. For this to be applicable, you must NOT have:

Been summoned to make a payment by a creditor for the debt within the past three consecutive years. Acknowledged the debt in the past three consecutive years, either in writing or verbally. Made a payment or promised to make a payment to the outstanding debt amount, from when the debt was due or since the date of your last instalment. Your debt has prescribed and your creditor may not harass you for payment.

The law that refers is: Prescription Act 68 of 1969, section 10 (1). This rule is in place to protect consumers against unreasonable interest as well as accumulating fees of creditors and/or collectors. It ensures that creditors who want to collect, will do so in a timely and decent manner.

The National Credit Amendment Act, of 13 March 2015, prohibits the sale and collection of prescribed debt. As such, you do not need to know about prescription and you don't have to raise prescription as a defence, to avoid paying the debt.

Which debts can prescribe?

The following debt CAN prescribe: Retail accounts Credit card accounts Telkom accounts Personal Loans / Pay-day Loans Gym memberships Cell phone accounts Monies owed on vehicle finance

The following debt CANNOT prescribe: Home loans Municipal accounts Money owed to SARS TV Licenses Judgements against you A 30-year prescription period applies to these accounts.

When does prescription not apply?

Prescription will not apply if - The credit provider can provide reasonable evidence that they tried to contact you during the prescription period You acknowledge the debt, or make payment on the debt The creditor takes legal action against you You are residing outside South Africa You are married to, or business partners with, the credit provider.

Credit providers and debt collectors will always attempt to collect prescribed debt!

Amendments to the National Credit Act in 2015 makes it clear that it is unlawful for credit providers or debt collectors to collect prescribed debt. When a credit provider sells their prescribed debts to a debt collector, the collector will contact you, demanding payment. Unscrupulous debt collectors take over this type of debt specifically because it is so difficult for creditors to recover. For the collector, there is a higher return on investment when collecting because interest, recovery costs, legal fees, etc. are all added onto the outstanding debt amount.

Be warned: Collectors will always try to collect, in spite of the restrictions placed on them by the law. They will try to find loopholes and ways around the restrictions. In this way they are undermining the rights of the consumer, by preying on the consumer's ignorance regarding the law.

Because debt collectors collect for their own account, they will counter claims of prescription in any way possible. Agents will simply state that your information is not correct and that you will have to pay. Others will take the high road, confusing you with legalese: 'A claim of prescription will not exonerate you from the debt'.

The truth is that once a debt has been prescribed, it is not merely dormant, it has been completely extinguished! (Except – as mentioned above - if payment or acknowledgement of debt interrupts prescription.)

What are my rights?

If a debt has been dormant for three or more years, a debt collector cannot ask you for payment. It is against the law if they do.

The National Credit Amendment Act, published 13 March 2015, prohibits the sale and collection of prescribed debt.

If you suspect that someone is harassing you and demanding payment from you on a prescribed debt, raise prescription as a defence and refuse to make payment until the debt collector provides evidence that the debt is not prescribed. Put your communication with them on record by writing them an email or a letter to confirm that you have requested them to stop the harassment or provide proof that the debt is NOT prescribed. They must provide you with the original loan agreement/contract, proof of default, the outstanding amount and interest and costs accrued. They must also provide reasonable evidence of attempts to contact you during the past 3 years.

Sign nothing, pay nothing, acknowledge nothing. Your only reply should be, ‘Prescription applies!’ If you are not sure, get advice on the matter from Libertine Consultants before you do anything.

How Libertine Consultants can help

If you are being harassed by debt collectors regarding prescribed debt, we can get it removed on your behalf. The service comes with a fee, but it's worth it when you know it has been properly dealt with and cannot come to haunt you again.

We start by investigating the status of the account with the credit provider. If the debt in question does indeed qualify for prescription, we request the prescribed letter from the creditor.

When we have the prescribed letter, we will log a dispute with all four South African credit bureaus on your behalf, to have the debt removed from your credit record. You will be free and clear within 21 working days!

Get in touch to learn more about prescribed debt and how we can help you regain your financial freedom and help you on your way to a prosperous future!

The pros and cons of debt review in South Africa in 2018

If you are currently battling to pay all your bills and struggling to cover day-to-day expenses, you might have heard of or considered debt review. The debt counselling process, developed by the National Credit Regulator (NCR), was created to safeguard consumers, but the process is often not fully understood. Today we take a look at the most important pros and cons of debt review in South Africa in 2018.

What exactly is debt review?

Over-indebted consumers apply for debt review and are assigned a debt counsellor to evaluate their outstanding debt. A repayment plan is developed for each individual consumer that allows the consumer to cover living expenses and settle their accounts with their debtors. In simple terms: they see how much you owe, how much you earn, how much you need to keep the boat afloat from one month to the next and then create a workable payment plan on your behalf.

The Pros of Debt Review

Professional guidance

When you apply for debt review, you are assigned an NCR-registered debt counsellor who is in charge of giving you budget advice and restructuring your debts. An important part of restructuring your debt is the negotiations with your credit providers to lower your instalments. The goal is to reduce your debt to manageble levels and improve your overall financial situation. Your debt counsellor – DC – will be monitoring your payments to your credit providers. Hopefully the financial education you receive during the process will prevent you from falling into the same trap in the future.

Breathing room

Because you are able to pay off your debts over a longer period, you will be able to meet monthly obligations like rent, electricity, water, school fees, groceries and other essentials. Your living expenses are taken care of first, then the debt. Your debt counsellor will also work with you to find ways of cutting costs and saving money.

Legal Protection

Once you are under debt review, the court order protects you. Your assets cannot be repossessed by a credit provider and your creditors may not harass you any longer with phone calls demanding payment. Once you have completed the process – you have finished paying all your debt (excluding your bond), there will be no permanent record of debt review on your credit record.

The Cons of Debt Review

No more credit (for a while)

To ensure that debt review clients are able to get back on the road to financial prosperity, they are not allowed to take on any more credit while they are under debt review. The only way to exit the process is to either pay off all your debts or to get the debt review court order rescinded.

Added expense

Counselling is not free but are not high either and are set by law. Fees are incorporated in the scheduled monthly payments the consumer makes to the debt counsellor. An initial, once-off application and administration fee of R350.00 may be charged at the discretion of your debt counsellor.

Not everything is covered

There are certain kinds of debt that cannot be included under debt review. This includes existing garnishee orders, judgements and default listings. Informal loan arrangements with family and friends, telephone accounts and incidental debts to care providers such as doctors are also not covered.

There you have it – the pros and cons of debt review in South Africa in 2018. If you have any further questions pertaining to the debt review process and how it will affect your financial wellbeing, please don’t hesitate to get in touch with a Libertine Consultant representative.

We are here to make the entire process as understandable and hassle-free as possible!

Debt consolidation - Can it work for me?

South Africa is one of the most indebted nations in the world and the outlook for highly indebted consumers is getting bleaker, especially with the April VAT increase looming! One of the 'easy solves' that are touted as a solution for debt strapped South Africans, is the consolidation loan. But what exactly is it? How does it differ from debt counselling? Would it be a good option for you? Read on and learn more…

What is a consolidation loan and how do I get one?

Your debt is consolidated into one single payment so that you no longer make several small payments per month.

You apply for a loan from your chosen financial institution.

They do a credit check (which may affect on your credit score negatively).

If your loan is approved, a lump sum is paid into your bank account.

You settle your debts.

You pay a single monthly instalment to the provider of the consolidation loan.

You have total control over how the loan money is spent or distributed.

Sounds simple enough, doesn't it? But remember T&C's will apply, no matter who your credit provider is!

What are the advantages?

The greatest benefit of a consolidation loan is that you have a single repayment instead of paying several smaller amounts to different credit providers.

It is sometimes possible, that the single instalment will be less than the sum of the smaller repayments.

You'll also be less likely to miss a payment, which will improve your credit profile and overall credit score.

You'll be paying off the loan over a longer period and it will be easier to manage your monthly budget.

Keep in mind that the above is best-case scenario.

What are the disadvantages?

The reality is that if you have too much debt, your risk profile is not likely to be very favourable.

With a high-risk profile - high debt – your interest rate is likely to be higher and the loan might not be big enough to cover all your debt.

All credit comes at a cost and it's important to understand that the interest and administration fees will add up to significantly more than the amount you initially borrowed. These include: High interest rates; initiation fees; monthly loan fees as well as monthly credit life insurance.

If an accredited creditor will not give you a consolidation loan, loan sharks and unaccredited lenders are ready to prey on the financially vulnerable, charging exorbitant interest rates that will trap you, the consumer, in a never-ending cycle of debt.

Are you financially disciplined enough to use the lump sum you receive, to pay off the outstanding debts? Or will you be tempted to take a payment holiday – buying some 'nice to haves', take your loved ones out for a change?

If you have a history of reckless spending – you may just have created another debt trap for yourself!

The short of the long

In short, consolidation loans are a valid option for individuals who have proved that they can manage their own budget and finances.

If however, you need support on this journey, get in touch with Libertine Consultants today.

From our range of debt solution products, we will be sure to recommend the one that suits you best. Our skilled and experienced debt counsellors know all the pitfalls in the process and will be able to assist you every step of the way.

We want you to make the right decision for your financial health, because we understand that debt creates a lot of stress!

The importance of budgeting for South African consumers

At Libertine Consultants, we don’t often have the opportunity to advise consumers on the importance of budgeting. Unfortunately, we only meet them when their financial situation has deteriorated to the point where they are desperate for our help. We step in and help them restructure their debt.

Prevention is always better than cure, so let's get budgeting before the crisis hits!

Manage your personal finances

Budgeting is the best tool any South African can have in his or her personal skills arsenal. Here are some of the reasons why you should use it to manage your personal finances:

Most importantly, it disciplines you to live within your means. This may seem a little obvious, but when you stop to think about it, organizing your income and expenses in a way that allows you a bit of space to wiggle when times are tough, is an obvious way to ensure that you don’t incur unnecessary financial burdens.

It teaches self-discipline. So that, even when you are earning a nice, robust salary, a monthly budget will teach you the self-discipline required to make sure that not all of it is spent at once.

Provide for your future

It allows you to provide for your future. While you may be earning good money at the moment, the day will come when you are either too old to continue working in your industry full-time, or when you would like to scale down and take some time off to enjoy your golden years. If you budget effectively, putting money away for retirement is an automatic part of the plan!

It empowers the next generation. If you are in the fortunate position to have a family, leading by example when it comes to finances, is a vital role for you as a parent. Our children learn their spending habits at home, so if your child grows up working within a budget, chances are they’ll continue to do so when they start earning their own money.

Is my debt out of control?

How do I know if I have too much debt?

The answer too this question may seem a little obvious at first glance - i.e. when you can’t pay all your creditors - but it goes a little deeper that that. At Libertine Consultants, we believe the first step to a financially prosperous future is knowing your limits and deciding where to draw the line. So how do you do that?

Calculate your real monthly spend

Often, what you think you earn and what you think you spend is substantially different from the true numbers reflecting in your account. With a copy of your latest payslip and a recent bank statement, look at the following numbers:

What is your gross income? This is the amount you earn at your job before any statutory deductions, e.g. tax and UIF, are deducted.

What is your net income? This is the amount you have left over after statutory deductions.

You are now left with your disposable income. All your personal, essential expenses are paid from this money – i.e. pension, medical aid, housing, travel costs, food, clothing.

Your discretionary funds are now left over. This money is not committed to mandatory payments. Your discretionary funds are used to pay your creditors, save, invest, or use however you see fit. If you cannot pay all your creditors from this money, every month, you are in trouble!

Make cuts where you can

Even if you are living comfortably within your means at the moment, something unexpected could happen or the day may come when your earning potential is not as high. Therefore, we always advise our clients to trim their expenses as much as they can. The money you save, is used to accumulate a nest egg for unforeseen eventualities.

Here are a few of our top tips to get started:

Don't buy what you need, buy what you can't do without.

Put a timer and insulation blanket on your geyser.

Invest in an on-the-go flask for coffee and tea when you're on the road instead of buying hot beverages.

Pack your own lunch from home to bring to the office every day.

Invest in reusable cloth bags instead of shelling out for plastic shopping bags every time you go to the store (also saves the planet!).

Sit down with your partner and look over your monthly expenses. Get creative about where you can trim it down.

Put all the money you save on the above, into a separate savings account and see it grow!

DID YOU KNOW? You are entitled to one free credit report per year from the credit bureaus. If you battle to understand the intricacies of the report once you’ve obtained it, you can contact Libertine Consultants for a thorough credit analysis (i.e. a breakdown of the information in your report).

Get in touch & stay informed

Is your debt out of control? Get in touch with a Libertine Consultants representative as soon as possible. We are here to assist you in making sense of your finances and returning to a state of financial equilibrium.

Clever ways to save on household expenses in 2018

Did the spending frenzy over the 2017/18 festive season leave you with a flat wallet and a permanent frown of concern? You’re not alone! A vast portion of the South African population feels exactly the same way.

Get to grips with your food budget

One of the simplest ways to save is to cut down on you day-to-day shopping. When you’re going to the grocery store without a real meal plan in mind, the odds of overspending are far greater. Instead, sit down with your partner and draw up a monthly meal plan ahead of time. This way, you’ll know exactly what you need, which allows you to do a single bulk shop at the beginning of the month; with weekly supermarket sessions to top up on fresh goods like vegetables, fruit and dairy. Keeping track of your food expenses in this way will also allow you to take advantage of specials. When you know exactly what you need per month, you can stock up when prices are down.

Cut down on ‘but I must have’ expenses

‘But I must have’ expenses are things like streaming services and gym contracts. Everyone has a Netflix account, so you must have one; everyone has a gym contract, so you must have one. The truth is you really don’t. If you cancel your Netflix or Showmax subscription, you’ll free up more time for reading and engaging with your family in the evenings. Also, you don’t have to go to the gym to stay in shape. Lace up your trainers and take the dog for a walk. Or download a yoga app and get your stretch on in your living room. Get creative!

Reuse, reduce & recycle

This requires a mindset shift. Instead of throwing things out or getting a new version of something that broke, see if you can use it elsewhere or fix it. If it’s the only thing you do this year – start recycling. It’s not only good for the environment; it also makes you more cognisant of the things you chuck in the bin. Before you know it, glass containers are reused for crafting supplies and scrap paper is shredded for mulch. Start small, make the mind shift and try to do better every day.

Financial questions to ask before getting married in 2018

Is there anything more rewarding than a loving, supportive relationship with a partner who shares your ideals and yearns to build a shared future together? It’s no wonder that getting married is such a big milestone in our lives – making the decision to spend your life with another person is a big step and such a union deserves to be celebrated.

Are we getting married in community of property?

If you choose to get married in community of property you will share all of your financial obligations, which means each spouse will have to sign off on any credit transaction (e.g. buying a car, renting a home, applying for a loan) the other enters. You will also share all assets and liabilities that were accrued prior to and during the marriage. Alternatively, you can get married outside of community of property, with accrual, in which case spouses share the assets during the course of their marriage based on a particular calculation if the marriage is ever terminated.

What is your debt situation?

It is imperative that you know if your partner is bringing any debt into your marriage. If you don’t, get married in community of property, and your spouse defaults on their financial obligations with a creditor, you will be held liable to settle the outstanding debt.

How should we cover ourselves financially as a unit?

Do you have a retirement annuity, disability cover, life insurance and/or an income protector each? Do you need to have it in your particular line of work? Does your employer contribute towards these expenses? These are things you need to know before you hitch your wagon to your partner’s. If you feel that you cannot answer this question very well, it might be worth it to consider the professional guidance of a trained financial advisor. As an unpartisan service provider, it is in their best interest to provide you with sound financial advice that will protect your family in case the unexpected might happen.