How to weather the storm

Maya Fish­erFrench pro­vides prac­ti­cal ways to sur­vive an eco­nomic tsunami

CityPress - - News -

For the past two years con­sumers were warned that there were tough times ahead, while day-to-day liv­ing be­came more and more ex­pen­sive.

In­creases in elec­tric­ity, rates, wa­ter and now taxes and in­ter­est rates have brought pres­sure on house­holds, es­pe­cially those with high debt lev­els. Ac­cord­ing to the Na­tional Credit Reg­u­la­tor, one in ev­ery sec­ond cred­i­tac­tive con­sumer is fall­ing be­hind in debt re­pay­ments.

We have seen this fi­nan­cial stress in re­search like that of the Old Mu­tual Sav­ings and In­vest­ment Mon­i­tor. It found that the per­cent­age of house­hold in­come spent on liv­ing ex­penses had in­creased from 57% in 2011 to 68% in 2015. The re­search also found that 41% of those sur­veyed were sav­ing less this year than last year. This is the high­est fig­ure since the sur­vey be­gan in 2009.

On top of al­ready de­te­ri­o­rat­ing house­hold fi­nances, the shock an­nounce­ment this week that our econ­omy was con­tract­ing has sig­nif­i­cantly wors­ened the sit­u­a­tion.

Not only are mid­dle class South Africans hav­ing to con­tend with higher prices but in­come prospects are also un­der threat. If the econ­omy con­tin­ues to strug­gle, com­pa­nies will be forced to con­sider re­trench­ment and, cer­tainly, there will be no above-in­fla­tion wage in­creases.

House­holds are reach­ing a crit­i­cal point in fi­nan­cial sur­vival and face no al­ter­na­tive but to take steps to shore up their fi­nances.

Here are seven ways to make it through the eco­nomic storm: It is time to get real about your money. No one can af­ford to keep their head in the sand. Write up your bud­gets, an­a­lyse your debts and have a fam­ily con­fer­ence. House­holds that make the tough de­ci­sion now will make it through the storm later.

12For­get about buy­ing a new car ev­ery three or five years. Once you have paid off your car, con­tinue driv­ing it for at least the next five years. The money you would have used for car re­pay­ments will set­tle other debt, and you can put some aside for when you re­ally must re­place the car.

3Don’t just swipe your card – think about ev­ery sin­gle pur­chase you make. Money is now a very lim­ited re­source and needs to be al­lo­cated ef­fi­ciently. If you need to go on a strict bud­get, con­sider draw­ing cash at the be­gin­ning of each week for your ex­penses, place it in itemised en­velopes such as “trans­port”, “gro­ceries” and “en­ter­tain­ment”. Use only this cash and leave the card at home.

4If your debts are start­ing to en­gulf you, get help sooner rather than later. The longer you deny your sit­u­a­tion, the worse it will get. It will cer­tainly not go away. It is far more dif­fi­cult to ne­go­ti­ate with your cred­i­tors once le­gal ac­tion has started. Con­sider debt me­di­a­tion pro­vided by the Na­tional Debt Me­di­a­tion As­so­ci­a­tion, or speak to a cred­i­ble debt-coun­selling ser­vice.

5Don’t re­sign to ac­cess your pen­sion. If you are faced with over­whelm­ing debt, there will be the temp­ta­tion to quit your job and ac­cess your pen­sion. In this eco­nomic cli­mate, it is un­likely you will find another job – and you could end up worse off than you are now.

6 7Be pre­pared to work harder and longer at work. If your com­pany is forced to re­trench staff, you will want to make sure you are an in­valu­able as­set. Start up­skilling. While un­em­ploy­ment lev­els could rise, the more skilled you are, the more likely you are to find work. Find out if your cur­rent em­ployer of­fers skills train­ing, or start a night course.

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