Five ways to handle your Januworry
Durban - At least 73% of employed consumers claimed that January is a more difficult month financially than December; while 38% said that they stopped paying store cards at the end of the festive season to survive the debt hangover in January.
This means that they either reversed debit orders or simply skipped paying their monthly instalments at the end of December. With back to school commitments a reality for parents in January, some find it difficult to purchase stationery and school uniforms due to a lack of planning in December.
This is according to an Old Mutual On the Money Survey (OTM Survey) carried out among just over 1300 shoppers in malls across the country during the 2018 festive season.
“Our survey also revealed that 55% of consumers plan ahead for the festive season and always stick to a budget while 21% do plan financially but struggle to stick to their budget due to unplanned expenses cropping up as a result of the festive season hype, a further 24% of people don’t budget at all for the festive season,” said Head of Financial Education at Old Mutual, John Manyike.
He said these figures highlight the extent to which many people start the New Year off with a debt hangover. He added that it is not surprising that the credit bureau monitor published by the national credit regulator shows that just over 24 million enquiries were made by financial institutions and banks on consumers’ credit report in respect of consumers seeking credit in the first quarter of 2018.
"In spite of these figures, Fret not, 2019 is your opportunity to set things right. You have the opportunity to detox your finances of all unnecessary debt," he said.
Manyike encourages all consumers to overhaul their debt and boss their money in 2019 with the following steps:
Face your Problem - Understand how much you owe and who you owe. Add up all of the outstanding debt to give you a clear indication of how much you owe. Next, take a look at how you currently use your monthly salary. Track your spending patterns by analysing your bank statements and draw up a realistic monthly budget that reflects the reality of your situation. Free apps like 22seven can also help to track your spending and keep your budget in check.
Learn How to live In Survival Mode - Now you need work on the monthly budget that you will be sticking to for 2019. List your expenses according to your needs, and make sure that you cut out non-essential spending. Be realistic in your planning, and do not cut your budget to the point where you cannot live. Include your current monthly deductions, fuel costs, as well as your grocery bill in this budget. Be strict with yourself. The goal is to make a budget that leaves you with at least some money at the end of the month that you can use to pay off more of your debt.
Consider debt consolidation - Consult a registered credit provider to help you explore consolidating all your loans into one. The credit provider will have to settle all your debts directly on your behalf. This way, you would save on multiple debit order fees, service fees and credit insurance fees, amongst others. Every cent counts!
Remember that loans can’t be included in your debt consolidation application due to affordability. So, consult your credit providers to make an arrangement here. Negotiate for a lower instalment until you settle your debt consolidation loan. Once you settle it, you can then move the loan consolidation instalments to charge down the outstanding debt. Avoid taking on any further debt until you have fully settled your consolidation loan. This way, you know your debt free day.
Approach a debt counsellor - If you are over indebted to the extent that you don’t qualify for debt consolidation, consider approaching a registered debt counsellor for advice and assistance. A debt counsellor will consider legal options to protect you from legal action such as debt review in terms of the provisions of the National Credit Act.
Boss your money - You should also explore alternative sources of revenue such as a part-time job or selling some products or services. The extra cash will go a long way towards paying off your debts faster and giving you more control of your money.
With all your unnecessary debt finally starting to be paid off, you should start seeing light at the end of the debt tunnel and even have some extra money left over to start saving. Set realistic saving goals, be it for the festive season, back to school in January or even your next holiday.
Be Patient when it comes to managing your money. Some of the recommended steps might take time and it is very important to stick to the game plan.
“The most important thing to remember is that it takes a lot of self-discipline at first. Work hard at spending less than you earn each month and do not make any debt or use your credit card for monthly expenses in 2019,” Manyike concluded.