Six ways to manage temptation and reduce your debt
A recent Statistics South Africa survey collected information from 203 magistrate’s courts around the country in 2016. This is what was revealed that nationally 48,000 summons for debt were issued, valued at more than R350 million with credit defaults representing 98% of the cases countrywide.
According to FNB head of Consumer Education Program Eunice Sibiya, these alarming stats clearly reveal a serious need for debt management plans in households across the country.
This week on the Be Financially Smart feature we took a closer look at ways to reduce your appetite for debt by managing your temptations.
Take a cool off period before you make a big purchase
Take some time to think about the purchase that you want to make and whether the debt you are about to take on for the next few months or years will meet your financial goals.If you struggle to make good reasons for the debt, avoid it.
Avoid accumulating debt
If you want to be debt free then you need to stop accumulating more debt. With interest rate uncertainty, higher fuel prices and ever increasing cost of living, this is the time to start saving your money not spending it.
Break old habits
Unplanned spending, instant gratification and chasing trends stand in the way of achieving your financial goals. Create new and positive ways of spending your cash so you don't have to end up servicing debt for the rest of your life.
How much is the debt costing you?
The best way to say no to debt is by taking a look at how much it actually costs you. Pay attention to interest rates. Always consider the long-term impact of the debt that you are about to get yourself into.
Get insurance for emergencies
To help you manage unfortunate events like accidents, medical conditions or even death, make sure you have the right insurance in place. If something unforseen happens, you will not have to put yourself into debt to recover from the event.
Pay extra on your existing debt to bring down the outstanding balance faster and avoid using that facility again during the month, like your credit card or overdraft.
Listen to the full interview with Eunice Sibiya below