Beware Public Holiday Fever
Holiday Season is Coming – A Consumer Story
The April holiday season is coming up, and after a few years full of stress and headaches, it would be quite nice to take the well-deserved holiday.
However, things are a bit tight right now and you haven’t been able to save much lately, thanks to all the price hikes affecting every avenue of your life.
But you’ve been managing your monthly credit payments. Your overdraft and credit cards have gotten you out of many tricky situations in the past, and you’ve become a pro at juggling your debt by paying your one account with another.
So, it seems quite a tempting to book your family that much deserved week of stress-free relaxation on the beach using your overdraft.
Just Slightly Higher Minimum Repayments
I mean, it only raises the minimum payment by a couple of Rands, and you can always just pay a bit extra next month to bring that instalment down.
From how you’ve been managing to get through the last while juggling your credit, you feel pretty confident that this will be easy, and certainly worth it because that holiday is also a very necessary part of your mental well-being.
After all, you really do deserve it…
The Snag
Here’s the thing though – credit facilities can be wonderful tools when utilized correctly.
The problem is that a credit card and overdraft can also be a ticking time bomb.
‘a credit card and overdraft can also be a ticking time bomb’
The balance might only grow by a few hundred Rand’s interest every month, but the problem is the balance will continue to grow as you continue to rely on it more often.
It can slowly become less and less manageable over time.
Running Out of Credit
You might end up like the proverbial frog in a pot of boiling water.
Impulse control becomes very difficult when you have access to such an amazing facility as it almost feels like “free money”.
It becomes much easier to book that lavish holiday, go to that nice restaurant or buy that new item, since the cost only adds up to an extra R200 on your card instalment every month. It’s a perpetual cycle of “I’ll deal with it later” until you realize it was too late 5 months ago, and both your overdraft and credit card have now both maxed out.
Now there’s no room left to juggle, and all the pins start falling. A large portion of your salary disappears the moment it hits your account, thanks to all the debit orders being the first thing to go off, then you must pay for your insurance, rent, internet and all the other things that are non-negotiable.
But everything feels like a non-negotiable.
You try and work out a budget and cut wherever possible, but it’s simply not enough. You feel overwhelmed and don’t know what to do. You start regretting every single purchase you’ve made on your credit card.
You start regretting ever booking that holiday, even though that was the best holiday you’ve had in years.
You Are Not Alone
If this has happened to you and you now feel like that frog in the boiling pot, you are not alone.
This is not an isolated incident, and it’s not a “stupid mistake”.
This has happened to around 60% of SA credit users.
The past 5 years have been tough and we have all learnt to scrap by. We have been forced to rely on lines of credit to substitute for the lack of adequate increases in our income. We are all currently stuck in survival mode, and it feels like every time our credit limits increase, it’s a lifeline giving us a sigh of relief.
A very small and temporary sigh.
Even though this might very well be a lifeline, it’s not a solution to the root cause of the situation we find ourselves in. It is more like putting a band-aid on a bullet wound.
Instead of sticking our heads in the sand, we need to look at other options to solve the cause of the problem, not add to it.
Finding Options
One thing to keep in mind if you feel overwhelmed is that you have options.
For example, debt review could be the solution you need to turn things around. It has a number of benefits.
Instead of paying one credit account with money from another credit account, with debt review you only need to focus on a single combined debt repayment every month.
In debt review your reduced debt repayment (with some creditor granted interest concessions) will actually go towards reducing the outstanding debt instead of the everlasting shuffle of robbing Peter to pay Paul.
Having a good Debt Counsellor on your side is one of the most valuable decisions you can make, should you find yourself in that 60%.
So, think about it.
Chat to a Debt Counsellor to find out what options you actually have.
Enjoy The Holidays Responsibly
We all need a break. A few days off can really refresh and refuel us, especially when it is not going to cause us future stress.
But, if you are considering going on a holiday this month, first take a look at your finances and consider the future impact it could have.
Would it be a wise choice to put even more strain on your credit cards?
Perhaps this year you could save yourself future burn out, having an assessment of your financials done by a Debt Counsellor before jumping into another debt-inducing holiday experience.
After all, the holiday memories will fade, but the debt repayments certainly won’t.
Debtfree Magazine would like to give a special thanks to Alex Stone of Sandton Debt Counselling for the help in drafting this article. To learn more about Sandton Debt Counselling head over to:
