Cut a few things and get out of debt, free up your cash
SO MANY things to buy, so little money. South Africans who have thousands of things could also be neglecting important aspects of their financial lives.
According to recent statistics, not only do we not save enough, but we are also overindebted and many people are barely making ends meet.
The situation may seem bleak, but there are ways to remedy the current state of affairs.
Standard Bank’s Nitesh Patel says: “There are two ways to get out of debt and free up cash. You can either earn more money or spend less. Finding a new job with a better salary is not always achievable, but spending less is definitely an option for everyone.”
Many of us spend money on things we don’t need – below is a list of items to consider cutting. Some may induce a “no way” response, but as long as you can find a few items to cut, you will be able to access some extra cash.
Books: Books are nice to have, but you could borrow from your local library or a friend. Visit market book stalls or second-hand shops and get them at a better price. There are also plenty of free and inexpensive ebooks available online. If you are happy to wait until the hype dies down on popular books, they will eventually become discounted.
Paid-for TV: If you feel that your finances are in disarray, cut out expensive TV services. These can cost upwards of R500 per month, money that could be better spent paying off debt or building up a retirement fund.
Water: Opt for tap water instead of buying bottled water; it is perfectly safe. For a little luxury, invest in a cooler with a filter or buy a filter jug.
SMSes and long-distance phone calls: Avoid paying for SMSes and long-distance phone calls by downloading one of the many “free” messaging apps, such as WhatsApp. Be careful, however, that you do not consume excessive data as out of bundle data charges are very expensive.
Gym contracts: Many people subscribe to services they end up not using. Be honest with yourself; don’t keep the contract if you know you are not going to use it.
Electronics: You don’t need to break the bank. A R200 kettle will work just as well as the one that costs R500.
Cars: Buying a new car every two years will subject you to a never-ending spiral of debt. You will never have the title in your hands if you keep trading in your car for the current year’s model. Keep your car until it is paid off. Then, if you trade it in, you will have some equity to put towards the new vehicle. By doing this, you will lower both your payments and interest charges.
Fix your fashion addiction: There are so many reasonably priced clothing stores available now, there is no need to spend R1 500 on a pair of jeans, for instance. You can still look great on a budget if you shop smart and look for sales.
Jewellery: Jewellery is lovely, but it is not always a good investment. The secondhand market for jewellery is not very robust (unless it is antique) and it is generally considered a non-performing asset. It also costs money to insure.
Food: The vast majority of food in supermarkets is processed convenience food and some of the foods are generally not healthy or economical. Rethink the way you shop and forgo pre-cooked ready meals or pre-cut vegetables. While they may save you time, they will hit your wallet.
Off-the-rack magazines: A single magazine off the rack can cost anywhere from R40 to R100. If you really want a mag- azine, it may be worth taking out a yearly subscription, as this can lower the price significantly. You can also try the online version.
Subscriptions you don't use: Some subscriptions automatically renew every year, causing yet another expense. If a service has stopped being useful, cancel it.
Infrequently used tools and appliances: If you only need a tool for one job, borrow or rent it.
“By doing a few of the things on this list, you could shave thousands off your monthly bills,” says Patel.” It’s worth the effort to see if practicing smart spending can reduce monthly overheads.
“Instead of spending your money on things that will eventually fade in value, consider putting it into a savings account or an investment. Such assets increase in value over the years, and help to secure a stable and comfortable future.”