Getting a handle on debt

DebtBusters

Recent statistics from the Local Government Revenue and Expenditure Review showed the level of consumer debt rose to R128.3 billion on March 31, of which R86 billion is carried by households.

There are a number of price hikes and policy changes still on the horizon, so it’s crucial for consumers to take control of their personal debt and spending to avoid being stuck in the debt trap.

Here are a few tips to help manage personal debt:

Find an accountability partner

Ask a friend, family member or partner to hold you accountable on your monthly spending and debt repayments. Also seek advice from a financial planner. Appointing someone to hold you accountable will encourage you to be more vigilant about not going over budget and paying the bills.

Draw up a budget

Drawing up a realistic budget is important as it will ensure that you live within your means, and allow you to keep track of where your money is going every month. There are a number of online budgeting tools and apps you can download for free to help with this.

Avoid credit

Although many banks and credit providers offer attractive incentives to purchase on credit, it’s always best to make cash purchases. Buying on credit makes it very easy to get further into debt and if you can’t afford to pay what you owe on your credit card at the end of the month, the deficit will grow each month and you’ll end up owing more and more. Preload your credit card with cash.

Make lifestyle changes

Often, we don’t realise just how much our lifestyle costs us; making a few simple changes can save you a lot of money. Find and do more inexpensive or free activities. These may include hiking, picnics, visiting a museum or having a braai at home. If you’re paying an expensive gym membership every month but hardly ever attend, try finding free workout videos online.

Negotiate rates and fees

There are a few cases where you can negotiate for the best rates and fees, for example with your home loan. There are also companies that will negotiate with the banks on your behalf to find you the best home loan.

It’s important to make a habit of managing debt effectively, and to seek help sooner rather than later when you’re out of your depth.

It’s crucial for consumers to take control of their personal debt and spending to avoid being stuck in the debt trap.