The Debt Review Danger Zone
Good Times & Challenging Times
Debt Review is an amazing process that is helping hundreds of thousands of consumers pay back billions in debt each month.
The process allows people to have what they need on a monthly basis while slowly making progress towards settling all their debt.
But the process is not without its challenges. After all, it takes years to pay off debt. Years in which you will face problems, times when you will be targeted by scammers and months when you feel unmotivated.
There are definite dangerous times during the process (and we are not just talking about December and April).
That’s why it is good to really focus on the benefits.
The Monthly Benefits
In the past, not only were you bombarded by collections calls and letters, WhatsApps and SMS, but you also struggled to afford the basics for your family.
That is because the average South African has to use more than 70 cents out of every rand to repay existing debt. And many of them are busy getting deeper and deeper into debt.
That means you probably started missing payments to some credit providers just so you could afford to put food on the table and buy electricity or airtime.
‘one of the biggest benefits of debt review is that you can have a realistic monthly budget for your family’s needs’
It is a terrible situation to be in, and that is why one of the biggest benefits of debt review is that you can have a realistic monthly budget for your family’s needs.
Now, it won’t be extravagant, but it will include all the necessities, and will even include things (you stopped doing) like saving towards big annual expenses.
How fantastic to (with a few adjustments) have what you need each month. This is a benefit you will enjoy every month of the process.
The Long Term Benefit
Most people live their entire life in debt.
Many people even die still owing the bank lots of money.
Who wants to live like that?
To break the cycle of living on credit and using credit to pay other credit is hard. That is why debt review is so amazing. It is a way to decrease your debt each month, rather than be stuck on the merry-go-round of debt, debt and even more debt.
Although progress is slow (to keep your monthly budget realistic) it is steady.
In fact, the day you begin debt review, you can get a plan of exactly how many months it will take to pay off all your debts. Instead of being stuck in debt, every month you will slowly see the balances go down.
Note: Some credit providers are notoriously bad at getting their statements to show the right figures, so don’t panic if you see balances not moving at first. Feel free to check in with your Debt Counsellor to confirm that things are progressing. Recently, the NCR insisted that credit providers sort things out and make sure your credit report correctly reflects the progress you are making. This is going to help things a lot, as it forces all credit providers to fix their computer systems.
And while things progress slowly at first, much like a snowball that eventually becomes an avalanche. You will see your debts shrink more and more as the process goes along. Then suddenly it will feel like all the debt disappears in a really short time.
This is of course, one of the major benefits of debt review.
Making Initial Changes Can Be Tough
When you first start debt review, it is a challenge.
A lot of changes are asked of you, in a very short time. During that time, you also have the least experience of debt review, so your doubts and worries are at their highest.
You still have to develop trust in the process, trust in your Payment Distribution Agent and trust in your Debt Counsellor.
It will get easier of course, as you see things working out, but that initial time period is stressful and changing from relying on credit all the time to switching to a cash lifestyle and only spending what you have is hard.
Everyone goes through this.
It’s tough but totally normal.
Inflation Vs Increases
Over time the price of things goes up.
We all know this.
Stats show that most people find that inflation is higher than any salary increases. So, that means, each year you earn slightly less to cover your monthly necessities.
That could be by as much as 5% per year.
Now, when that starts, 5% seems like a little and you may not immediately notice, but over time, as the months and years pass, you will begin to notice that you can’t buy what you did before. 5% one year, becomes 10% the next year, and by year 3 or 4 (when things are at 20% more than before), you will definitely notice it!
You may start to use funds that you should be saving towards annual costs, just to buy what you need. After all that increase of 5% or 20% has to come from somewhere.
You are not being outrageous and extravagant. You are not being wasteful, but you will find that you simply can’t cover all your expenses like when you first started debt review.
That can make you feel frustrated and can present a danger.
You might get confused and blame the debt review or the Debt Counsellor for this problem.
You might fail to make the needed changes along the way, and when you get hit by emergency expenses, you may feel you have to dump all the progress you have made through debt review and short pay or miss a payment.
That’s really, really dangerous to your financial future.
Warning Signs
If you have stopped saving towards annual costs.
If you have stopped doing a budget every month.
If you don’t check your statements anymore.
If you have not adjusted your spending for a long time.
If you are unable to stick to your budget for groceries each month.
Entering The Danger Zone
After the initial period of making tough adjustments, things will feel amazing.
This is the honeymoon period.
Suddenly, you feel like you can breathe, you can sleep well at night, life is amazing.
Even if you get stupid collections calls, if your Debt Counsellor has trained you on how to deal with them, you will feel on top of the world.
Then…
The drudgery of making monthly debt repayments will begin.
Month, after month. You pay, pay, and pay some more. It’s dull and it’s boring.
During this time, you will experience unplanned expenses, family issues, work problems… basically, life.
Each problem will test your resolve to stick with the process.
By then, the glow of the honeymoon period will be gone. You will start to long back to the days of spending on credit, and slowly, life will begin to squeeze you.
At the same time, as explained previously, you will find that your income is being surpassed by inflation. You will have less money available, and unless you start to make some big changes, you are going to enter the danger zone.
‘unless you start to make some big changes, you are going to enter the danger zone’
This is where low enthusiasm, less available funds and the danger of not saving all collide.
If something goes slightly wrong here, you could bomb out of the whole process.
If you do, you will lose all that you have achieved so far.
It is Good To Know Where You Are In Your Journey
Guess where most people drop out of the process?
Scammers, Fake Offers, Lies and Other Dangers
Worse yet, during this already dangerous time, scammers may call and offer you false deals of paying even less towards your debt.
Real credit providers or more likely scammers may offer you credit that you can’t really get but only if you bomb out of debt review like they suggest.
Fake offers on social media offering to get you out of debt review might trick you into committing financial suicide by dropping out of the process, right into the waiting arms of scammers.
You could lose everything.
When Things Get Better
When you pay off your first account through debt review it can be so exciting.
You finally feel like you are making progress.
Then those freed up funds, which were going to that first account, are used to pay towards other accounts.
Soon, there is another account that’s settled, then another. Suddenly, you can see all the progress.
It feels like it has happened overnight, but in reality, you have been chipping away at this problem all along. You just could not see it so clearly.
The debts begin to disappear, one after another, until you only have one last debt to settle. Your motivation will never be higher. Your enthusiasm for debt review will shoot through the roof.
When you pay that final debt and get that clearance certificate, it will feel amazing.
A lot of people cry with relief. It is a moment in your life you will always remember.
Progress One Month At A Time
If you successfully make it through the initial hard part, be careful once you enter the danger zone.
Beware of false promises. Beware of getting complacent and lazy about your debt review. Beware of making a big mistake with big ramifications.
Debt review has successfully freed hundreds of thousands of people from being enslaved to credit and credit providers. It has set them free and sent them on a journey to creating future wealth for their families.
What an amazing process for those who stick to it through the tough times.
Understanding where you are on your journey to financial freedom can help you prepare for challenges and be aware of dangers. After all, forewarned is forearmed.
If you are starting to take strain each month and feel like you are vulnerable, like your enthusiasm has disappeared, then talk to your Debt Counsellor. They will help you see how far you have come and help you to focus on the monthly benefits of debt review as well as the long-term rewards.
They can help you through the debt review danger zone.
Well done on getting this far.
Keep it up.
