Spring clean your finances
It’s Summer time, time for fresh beginnings, and the opportunity to spring clean. However, instead of spring-cleaning your cupboards, how about spring-cleaning your finances?
The first step in the Spring-cleaning process is to take stock of the current situation. Taking stock means drawing up a list of all your accounts and debts and checking the interest that you are paying on the various accounts. Go through unopened mail and emails and check if there are accounts that are in arrears.
Draw the last three months of bank statements and make a list of what money has been spent on paying bills versus unplanned spending, versus saving.
‘Unplanned spending is usually as a result of poor planning’
Based on the analysis of your bank statement, and accounts you should be able to draw up a monthly budget. Unplanned spending is usually as a result of poor planning, poor saving habits and poor goal setting. If you know in advance that you need to buy an outfit for a special occasion or that you would like to go on a holiday at some point in the future, then you could purposefully put money aside for these occasions and goals.
Try and save as much of your salary as possible. Initially, you can start with as little as 10% of your salary after taxes, and eventually build up to 20-30%. Savings are a measure of protection for both unforeseen times as well as planning for the much-needed vacation that you have been longing for.
‘there is no point saving money if your debt obligations are not being met’
However, there is no point saving money if your debt obligations are not being met. This is the same as burying your head in the sand and hoping that the debt will go away.
Whilst Spring-cleaning your finances bear in mind the following advice on money management:
• Store cards and credit cards are high-interest rate vehicles and should not be used as ways to extend your income when you can’t afford to spend the money in the first place. Ideally, pay-off store cards and cancel these accounts.
• If you can’t afford it, don’t buy it.
• Pay-off your credit card every month. Don’t allow the outstanding balance to accumulate to unmanageable levels.
• Don’t be coerced by call centre agents, SMS’s and emails extending and offering you more credit. Limit the temptation to spend beyond your limit.
• Re-negotiate your existing debt with your credit providers, if possible.During the process of Spring-cleaning, you may discover that actually, you are way more over-indebted than you realised.
Signs that you may need help are:
• Skipping credit obligations on a monthly basis
• Using one credit card to pay another, because you can no longer service your credit card or store card debt from your monthly income
• Obtaining short-term, high interest, loans to pay for daily living expenses
• Numerous letters of demand from creditors clogging your mailboxes
• Several Emolument Attachments and or Garnishee Orders
Use NCR Registered Service Providers
When you realise that your debt obligations are completely out of control, the wisest thing to do is to speak to an NCR accredited Debt Counsellor. You can also find a list of Debt Counsellors in your area at the back of each issue of Debtfree Magazine each month in our Service Directory Section.
The DCM Group, who helped provide some of the warning signs information above, say that they are affiliated with a premier, national network of accredited, independent debt counsellors to assist over-indebted consumers. If you are under debt review, your payments have to be collected and distributed by a payment distribution agency, such as the National Payment Distribution Agency. Payment Distribution agencies safeguard consumer payments and ensure correct distribution.