With the turmoil of 2020 behind us and a return to something approaching normal during 2021, now is a good time to take stock of your finances.<\/p>\n\n\n\n
Benay Sager, head of DebtBusters, South Africa\u2019s leading and largest debt counsellor, says consecutive lockdowns affected most people\u2019s finances.<\/p>\n\n\n\n
He said: \u201cPerhaps predictably the consequences were most significant for people in consumer sectors, such as retail, hospitality and tourism, where opportunities to earn an income diminished or entirely disappeared. However, we are also seeing \u2018underemployment\u2019 resulting from salary reductions.\u201d<\/p>\n\n\n\n
Payment holidays and successive repo rate reductions provided much-needed temporary relief, but now consumer spending patterns are adjusting and lenders are asking for their money back.<\/p>\n\n\n\n
Sager cautions against complacency even if you\u2019ve been lucky enough to keep your job, managed to sustain an income throughout the disruption or are now able to start earning again.<\/p>\n\n\n\n
\u201cAlthough things may seem to be returning to normal, it\u2019s still a very difficult and uncertain environment,\u201d he said. \u201cConsumers need to focus on what they can control so that they can put themselves in a better position to deal with any setbacks as the economy starts to recover.\u201d<\/p>\n\n\n\n
Sager suggests applying the following three steps:<\/p>\n\n\n\n
\n 1. Assess where you stand financially<\/i>\n<\/p>\n\n\n\n
Do an honest assessment of your financial situation using an online self-help tool. It may sound daunting, but other than taking a bit of time it\u2019s an easy thing to do and will give you a perspective on where you are, and help you set some goals and keep track of progress.<\/p>\n\n\n\n
There are plenty of financial online tools available to help you, such as www.debtbusters.co.za\/tools-and-advice\/budget-calculator\/<\/p>\n\n\n\n
Alternatively, divide a sheet of paper into two columns and list all your income in the left column and all your expenses on the right.<\/p>\n\n\n\n
Be as honest and thorough as you can. Your bank statements for the past few months, bills and receipts can all help build an accurate picture of how much you\u2019re spending and on what.<\/p>\n\n\n\n
It should give you an idea of where you can reduce some expenses and which debts to pay off \u2013 preferably start with short-term debts with the highest interest rates.<\/p>\n\n\n\n
Ideally you should do this exercise every quarter. Having done it once it\u2019ll take you less time when you do it again.<\/p>\n\n\n\n
\n 2. Set reachable but elastic financial goals<\/i>\n<\/p>\n\n\n\n
These will depend on financial circumstances and will be different for everyone. At the same time, they should be informed by your own assessment in step 1.<\/p>\n\n\n\n
For some it may be planning to pay off short-term or unsecured debt, for others it could be starting an emergency fund to cover unexpected future expenses, while those with some disposable income may consider investments as a good way to grow their money. The important thing is to be realistic during the time-frame in which you are trying to reach your objectives. Meeting achievable targets will encourage you to aim higher.<\/p>\n\n\n\n
The best approach is to think about a series of steps ranging from smallest to largest, and then build them over a longer time horizon. Once you\u2019ve achieved a few goals, you should get to a position where you\u2019re able to save some money each month. By investing your savings in the right places you can eventually reach your larger, longer-term goals.<\/p>\n\n\n\n
\n 3. Don\u2019t delay<\/i>\n<\/p>\n\n\n\n
If your assessment in step 1 finds that your monthly expenses exceed your income and you can\u2019t find a way to rectify this, you may need expert help in the form of a debt counsellor. Find a reputable, registered debt counselling firm with qualified debt counsellors who will give you impartial advice and help you make the right decisions.<\/p>\n\n\n\n
Debt counselling is a process regulated by the National Credit Act which allows consumers to pay off their debt over an extended period at lower interest rates. Reductions of up to 90% on interest rates for unsecured debt can be negotiated. Debt counselling helps you pay at a rate you can afford and retain your assets such as your house and car.<\/p>\n\n\n\n
Says Sager: \u201cAvoiding or ignoring the problem is a common reaction when people are struggling with debt and have fallen behind on paying for a home or a vehicle, but it\u2019s not a solution. There are options, but it\u2019s important to act before you face the possibility of having your house or car repossessed.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
With the turmoil of 2020 behind us and a return to something approaching normal during 2021, now is a good time to take stock of your 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