We live in a society where “more” is seen to be more, and if you don’t drive a new car, have the latest HD 3D TV, or go on holiday at least once a year… well, quite frankly, you haven’t made it and aren’t quite as good as everyone else.
On top of that, there’s the ever-increasing cost of living to consider – the price of food, clothes and petrol keep going up and up, whilst wages do not.
With the pressure of all of these things, combined, it’s very quick and easy to get into trouble with credit. And once you’re in trouble, it can be a very slow and painful road to financial recovery.
The University of South Africa (Unisa) released figures from research they’d done, which showed that South African households are collectively R106bn in debt. In real terms, that means households are at least two months behind with credit payments.
Here are our top five tops to avoid getting into trouble with credit.
1 – Be your financial know-it-all
Do you know exactly how much money you have coming in each month? Probably. But do you know exactly how much money you have going out each month? Probably not!
Become your own financial know-it-all and know where every cent comes from, where every single cent goes to. Those little purchases: a can of Coke here, a bar of chocolate there, the magazine that caught your eye – they all add up!
When you’ve done this you can see where all your money goes. If you need to make savings you’ll be able to see where, and put together a budget that works so you don’t need credit.
2 – Make a budget and stick to it
It’s almost impossible to keep your finances under control if you don’t have a budget, so make one! Start with the most important things first like your rent, or bond, and household bills. Then allocate money for food, fuel and other essential daily living expenses.
Once you have your budget in place, check to see whether your money coming in covers everything. If it doesn’t, go back and look at where you can make some savings – can you make and take food to work, rather than buying it from the café? Do you really need to stop off on the way, for that cappuccino and muffin to go?!
Above all else, when you’ve got your budget sorted – stick to it and keep detailed records of everything you spend, and revise it every month.
3 – If you can’t pay for it with cash – wait until you can
Very few people can ever pay for their homes with cash, so that is an obvious exception to this rule. But holidays, cars and clothes? If you can’t pay for these things with cash, don’t buy them until you can.
Is it really worth paying for an expensive two-week holiday with credit, which will be quickly forgotten and take years to repay? Do you really need to have a brand new, top of the range car that comes with all the latest gadgets and massive monthly repayments? And that new pair of designer shoes? Is it essential that you have them right now, or can you wait for a little while and save up for them?
Stay out of the credit trap – if you can’t pay for things with cash, wait until you can.
4 – SAVE!
Okay, so saving never sounds very sexy, but once you get into it the habit of it, it’s rather fun (seriously!). There are few more comforting, and stress relieving things, than having some money saved. Whether it’s for that holiday you’ve been planning for ages, the car you’ve been longing for, or just in case something unexpected happens – knowing you have that money there for when you need it is great.
If you can, aim to save at least 10% of your money each month; if you can’t, save what you can. When you see it adding up month after month, that’s when it starts to become fun!
5 – If you’re already in credit trouble – ask for help
Don’t ignore your debt and hope it will go away – this will simply make your financial situation much worse.
Go back to steps one and two and work out how much money you owe and who you owe it to. Contact your creditors and explain your situation to them – the earlier you do this, the more likely it is you’ll be able to sort out reduced monthly repayments with them. It’s in their interests to work with you, but they can’t help if you don’t ask them to.
Remember, cash not credit. Make a budget and stick to it, and if you’re already in credit trouble – don’t wait, ask for help!
If you are in serious trouble and your creditors aren’t willing to negotiate terms with you, seek professional help. Remember, GetMore offers FREE financial advice and debt counselling, so simply call 084 11 438 48 now, and let us take the weight off your shoulders.