Avoid the Jan­uary blues

Vuk'uzenzele - - General -

OVER­SPEND­ING DUR­ING the fes­tive sea­son can put a ma­jor strain on your fi­nances, es­pe­cially once the Jan­uary bills ar­rive.

Get­ting caught up in the joy and giv­ing that comes with the fes­tive sea­son of­ten re­sults in peo­ple head­ing off to fi­nan­cial in­sti­tu­tions or loan sharks in Jan­uary to bor­row money.

And this, quite sim­ply, is how their debt spi­rals out of con­trol.

Ac­cord­ing to DebtSafe’s spokesper­son Matthys Pot­gi­eter, peo­ple can­not clear their debt with­out a proper strat­egy and fi­nan­cial plan­ning. He rec­om­mends that you con­sider the three ‘fi­nan­cial Rs’ as part of your New Year’s res­o­lu­tions.

“The three fi­nan­cial Rs are re­cover, re­store and re­new,” he said.

Pot­gi­eter rec­om­mends that you pre-plan your new fi­nan­cial jour­ney so that you don’t re­peat the steps taken in pre­vi­ous years. “The best way to start your re­cov­ery process is to out­line your fi­nan­cial goals for 2019. This in­cludes those re­al­is­tic short- (birth­day party), medium- (ve­hi­cle fi­nance) and long-term (re­tire­ment) goals,” he said.

To re­store, do your home­work when it comes to what worked in your life fi­nan­cially and what did not. “If, for ex­am­ple, you used to have an out­lined monthly bud­get but started to avoid it - why not start again and set it up in a sim­pler man­ner that will work bet­ter for you?”

Then it’s time to re­cover. “A new year is sup­posed to re­flect a fresh start, so try to cre­ate a debt-free begin­ning for your­self,” said Pot­gi­eter. “Check your bank state­ments and know where your debt bur­dens are and de­cide how you can start pay­ing your debt back.”

Avoid loan sharks

Turn­ing to loan sharks in Jan­uary is the worst thing you could do, as loan sharks op­er­ate out­side of the coun­try’s laws that gov­ern the ex­ten­sion of credit. They there­fore charge in­ter­est rates that are much higher than the max­i­mum cap al­lowed by the Na­tional Credit Act (NCA).

If you do have to fall back on credit, rather turn to a reg­is­tered fi­nan­cial ser­vices provider that’s reg­u­lated by the NCA. This will en­sure that you get the best in­ter­est rate.

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