By Emsie Martin
December has come and gone in the blink of an eye. The festivities are over and done with and only the countless invoices and the responsibility to pay off credit remain. 2020 might be the ideal time to turn around your financial situation. The sooner you manage your finances properly, the greater your chance of your debt not getting out of hand.
“The shocking R1.90 trillion outstanding consumers’ credit, as indicated by the National Credit Regulator (NCR), paints a frightening picture. Being proactive and tackling your financial year’s decisions and aims seriously, is certainly a top priority. This is the ideal time to prevent you becoming a part of this statistic,” says Carla Oberholzer, debt advisor at DebtSafe.
Four financial tips and aims on which you can focus in 2020:
- Budget properly and make amendments if necessary
It is important to keep pace with your finances and there is no better way than to compile a budget according to your needs for each specific month.
Start with your net income minus the essential expenses as well as debt obligations. This will then be equal to a surplus (+) or minus (-) that you will have left over, or not, for the month.
You will realise when you are on the right path or when you have to do something drastic to redirect your steps. If you decide to amend your monthly budget, do it sooner rather than later. Each month brings its own financial responsibilities, for example school necessities or home and car maintenance.
- Take stock of your income, expenses and avoidable costs
It is of paramount importance that your expenses not exceed your income. If you have your budget in place – great. But now is also the time to get rid of those unnecessary ‘leakages’:
- Print out your latest bank statement or the previous three months’ statements and study them carefully.
- Make sure that all the things you are currently paying for are indeed necessary.
- Identify costs that you could have avoided and that will be excluded from your budget from now on.
- If you are in arrears already, make timeous arrangement to rectify it.
- Avoid things such as take-aways, other luxuries such as excessive shopping sprees and service and gymnasium contracts that you might not even be utilising.
- With regard to your medical fund, life insurance, pension fund or similar plans and offers, it is important to revise your contracts and providers regularly. You never know where you could save money with a similar plan or package. If you don’t do research, you will never know.
- Increase your involvement level
Remember, action speaks louder than words. Do you know what is going on in your finances? Don’t think that if you stick your head in the sand like an ostrich all your financial worries will disappear. Here are a few tips to ensure your involvement:
- Keep a close eye on your budget.
- Compile shopping lists and stick to them.
- Try not to use your credit cards to pay for life essentials, such as fuel or groceries.
- See to it that you pay off your debts bit by bit every month. You can start with the Snowball method – by for example paying off your store card with the lowest instalment first. Or, if you have more perseverance, you can apply the Avalanche method – by for example trying to pay of your credit card with its high interest rate first.
- If you see you will not get by at the end of the month, you can give your income a boost by using the skills and resources at your disposal to earn an extra income.
- Getting out of debt is not a one-man show
Don’t try to climb your debt mountain alone. There are financial planners, advisors and bankers available to assist you. In serious debt cases the NCR as well as registered debt councillors can guide and help you to overcome your vast debt situation. Turn over a new leaf and try not to look for excuses.
DebtSafe serves as a regulated company with registered debt councillors. Email: email@example.com or SMS your name and surname to 30898 (free SMS).