In our country's current economic environment, knowing how to manage your debt is extremely difficult. Not only as an individual but also as an entrepreneur.
Rising interest rates and costs of living.
This is a ‘How to Manage Your Debt Guide' with the main goal:
To avoid becoming over-indebted. Because interest rates and inflation rise continuously, it is an ongoing battle to survive without credit. You can do it too. If you want to know how to live a debt-free life, we can help you.
Definition of Over-Indebtedness.
Over-indebtedness occurs when you accumulate debt that exceeds your monthly income. In layman's terms, it basically means that if you’re struggling to pay your debts monthly and you need to rely on credit cards and an overdraft to take care of your basic needs every month, you are without a doubt over-indebted.
Warning signs of excessive debt...
The first symptom that you are over-indebted is when obligations, bills, or living expenses absorb more than 70% of your net income and you require credit to pay for your basic needs to subsist, like groceries, rent, school fees, etc.
Basic Needs to Subsist
You'll find references to this term many times in this article. What it means is:
The bare basics that you and your family need to service. For instance, a bed to sleep in, a home to stay in, food to eat, and access to basic healthcare and education.
There are different approaches to managing your debt.
Because if you know how to manage your debt, you can maintain your creditworthiness and avoid becoming overly indebted.
1. Don't rely on credit!
One of the first signs that your debt is out of hand is when you feel compelled to take on more debt each month just to get by.
2. Re-evaluate your living expenses.
When this happens, it's important to re-evaluate your living expenses and look for ways to live a less expensive life by avoiding accumulating new debt. Trying to find new ways to earn more money so that you can settle your debt and start living again.
3. Determine your debt repayment choices.
Know the interest rate, repayment conditions, and monthly payments for the new debt you're taking on. Knowledge is power, and you will not blindly incur debt that you will be unable to service. Managing debt is not easy, because there is so much temptation. But we've seen our clients do it and belief that you can be Living a Debt Free Life as well.
4. Buy the item you can afford, not whatever you are able to borrow.
Even though this phrase seems easy enough, it is not that easy. Everyone enjoys nice things, regardless of what they are, for instance, a nice new vehicle, a nice couch, or a nice dress. Creditors make it easy to obtain credit for these kinds of purposes. If you must borrow money to purchase anything you have to evaluate if it's a 'NEED' or a 'WANT' first.
THE GREAT QUESTION NOBODY WANT TO BE HONEST ABOUT...
Is it a 'want' or a 'need'?
The hardest part of knowing how to manage your debt, is being able to say no and distinguishing between a
NEED and a
WANT.
What is a 'need'?A 'NEED' is a necessity. It is something you cannot do without. Otherwise, it will have a negative impact on your daily life. In short, it is a must, you cannot live life as you know it without it. For instance, you need to have food in the house, even if it's only bread and milk, but you need to eat.
What’s a 'want'?A 'WANT' is something that is not necessary but would be pleasant to have. For example, you desire a new car since you got an increase, but your old one is still in good working order, and you've already paid for it. In summary, it's "nice to have'. It's not a necessity. If you don't have to make debt, don't.
5. Creditors can lead you into unnecessary indebtedness.
Creditors can entice you into excessive debt by providing you with tempting credit products that are right on the edge of your affordability range, in terms of their credit assessment. Remember it is their business to know how to entice you into buying even if it is on credit. Because that is the way business works. Not to feel sorry for the poor soul being enticed into buying something he / she cannot afford, but to sell as many products as possible to make a profit.
Different approaches to manage your debt:1. Maintain a budget.
To successfully manage your finances, create a budget that includes all of your income and expenses. Without a budget, you have no idea where your money is going or what money "bleeds" you may have. Stay on that budget, keep it strictly and you will be debt free and stay debt free your whole life.
2. Make a list of all your outstanding debts.
It is critical to understand your debt by recording all due payments, as well as the due date and outstanding balance due. It is also important to know when the last instalment is due. It’s normally listed on your credit agreement. Keep track of it and once the last instalment is paid request a paid-up letter to ensure that no further monies are due and that your credit score will not be adversely affected.
3. Always save for a rainy day.
Now I know that I am going to be crucified for saying this, but always try to put aside some money for a rainy day. Even if it is as little as R50.00 per month. You can increase the amount as you please but remember if you save that money monthly and don't use it unless it's a necessity, you'll always have money for a rainy day or at least part of what you need, therefore the credit amount you need will not be that much. Nobody ever got rich by squandering their income but by saving as much as they can.
4. If you're uncertain about how to manage your debt, consult with a professional.
Speak with an accredited Debt Relief Specialist to help you manage your debt. This is extremely important, especially if you’re already struggling with over-indebtedness. Trying to manage your debt when you’re over-indebted is like climbing Mt. Everest without any gear. You need professional assistance to get you through this difficult time and Cure Debt, being the only Debt Relief Solutions company in SA that consist with all the different debt relief solutions under one roof will be able to help you in this endeavour. We care about you and helping you become debt free.
Cure Debt the ultimate Debt Relief Solution to your unique debt problem. With a
proven track record, we are proud to state that can help you Become Debt Free.
