How To Manage Your Debts

Dream with me for a moment. Imagine your credit card debts are all forgiven, your student loans are all wiped clean, and your car payments are gone and paid for. Imagine YOU were completely debt free. What would you do with your money? What would you do with your time? Would you spend more time with a loved one? Would you take that vacation you’ve been dreaming of? Would you buy something nice for that special person? Would you save or invest your money? The possibilities are endless!

To get to a place where debt is a thing of the past, you need to start somewhere. Getting into healthy spending habits is like getting into shape, you need to make it a daily routine and manage your spending and debt payments, so you can be debt free. Whether or not you only have a little bit of debt or a lot, you need to start putting effort into making payments and keeping up with all the debts that you still need to pay. This article will focus on simple methods to manage your debts.

1) Create a List

Create a list of all your debts, the creditors, the amount you owe, the monthly payment and due date. Use your credit report to confirm all the debts. Once you have all your debts laid out in front of you, you can begin to see the bigger picture. You can update this list every month, once a payment is made, you can set goals for yourself to indicate when you want to have some of your debts paid off. This will put everything into perspective, and can be quite rewarding as you can visibly see your debts growing smaller and smaller.

2) Urgent Debts First

Because credit card debt usually have higher interest rates, consider paying them off first. If you have more than one credit card the best strategy would be to prioritise the one with the highest interest rate, because that one cost’s the most money. Use your Debt List to rank each debt in the order of most urgent – and the order you want to pay them off. Another tactic to keep in mind, is consider paying the debt with the lowest balance first.

3) On Time, Every Time

Missing payments will make it harder for you to pay off your debt, since in most cases you’ll pay a late fee, essentially causing you to pay more than you should. You can set a reminder on your phone or a calendar app to remind you when and how much you need to pay on a specific day, maybe even a day before it is due. If you do miss a payment, don’t wait for the next month to pay, by then it could be reported to a credit bureau, instead pay on time and avoid the whole fiasco in the first place. Make at least the minimum monthly payment every month.

4) Budget for Everything

Setting up a budget is simple, and can help you achieve your financial goals. This can guide you in saving for the future, while ensuring that you have enough to spend on the things you need. Keeping an accurate budget will help ensure that you can cover all your monthly expenses, so that you don’t have to get into debt in the first place. Plan far enough ahead so that you can take early action if it seems like you might not have enough to manage your debs this month. If you have money left after all your expenses are covered for the month, use it to pay off debts faster.

5) Emergency Funds

Life is very unpredictable and sometimes unforeseen expenses can occur. Who knows what might happen? Make sure you have a small emergency funds in case this happens. Start to work toward creating a small emergency fund, saving a little bit of money at first. Set a goal and work towards that. Once you have achieved that, set a new goal and keep building a bigger fund. Eventually you want to build up a reserve of about 6 months of living expenses.

6) But What If?

If your funds are limited some months, (which can sometimes happen) and you can’t make the minimum payments to all your accounts, focus on paying the debts that are still in good standing, to avoid losing your positive accounts for those that have already affected your credit. Pay the past-due-accounts when you can afford to. This should only be in case of emergency, as you should strive to always pay all your accounts on time.

If you are struggling to keep up with your debt, contact Debt Sense Group today!

Know Your Rights

Happy Human Rights Day to each and every South African! Human Rights Day and World Consumer Rights Day are highlighted on the government’s calendar, so Debt Sense Group has dedicated this time to raise awareness for consumers and their rights. DEBT does NOT discriminate – so know your rights!

According to South African human rights – everyone has the right to: equality, human dignity, freedom of movement, residence, language, culture and life. Having the opportunity to take out credit (to create debt) can surely help citizens to achieve some of these rights.

How exactly? Debt does not discriminate because it is available to most – helping citizens to live life to the fullest. The danger and red flags, however, come in when consumers are uninformed about their rights and their (or their creditors’) responsibilities regarding the borrowing or lending process of credit.

When you know your rights, DEBT won’t try to interfere with your financial future and might also not be able to indirectly, threaten your human right to (financial) freedom.

You need to make sure that you educate yourself about the following: what the National Credit Act (NCA) entails, what the role of the National Credit Regulator (NCR) is, and what your consumer rights are.

The National Credit Act in a nutshell:

The NCA (also referred to as ‘the Act’) became fully operational on 1 June 2007. The Act aims to provide improved standards of consumer information and attempts to promote a fair and non-discriminatory platform for consumer credit while making sure the process is regulated.

About the National Credit Regulator:

The name is evident – the NCR is the ‘regulating body’ of the South African credit industry. The regulator was established by the National Credit Act No. 34 of 2005.

The NCR, therefore, encourages/promotes the development of an accessible credit market – mainly involving underprivileged persons, low-income individuals and isolated communities. Credit bureaus, credit providers and debt counsellors are enforced by the NCR to comply with the Act.

Ten basic consumer rights:

Hereby, a few consumer rights as emphasised by the Act and the NCR. As South Africans we need to take note of:

  • Apply for credit
  • Receive protection against discrimination when applying for credit.
  • Reasons for the refusal of credit.
  • Be given documentation/information in an official language.
  • Be given information/documentation in plain or understandable language.
  • Receive documents relating to the relevant credit transaction/agreement.
  • Privacy of any personal information.
  • Access and challenge credit records and information held by credit bureaus.
  • Receive recurrent statements.
  • Apply for Debt Review (in the case of severe debt/over-indebtedness).

Yes, debt does not discriminate and is available to South African citizens. But consumers are encouraged this month to start making sure they know their rights. This can enable you to take care of your own financial situations and manage your credit obligations in such a way that you avoid a debt mess or entanglement.

5 Tips for Valentine’s Day on a Budget

Valentine’s Day can be an expensive affair, but it doesn’t have to be. You can have a wonderful evening or day with your loved one, without spending a fortune. We’ve compiled a list of sure fire ways you can have a fabulous Valentine’s Day without breaking the bank.

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DIY Gifts:

Instead of going out and buying expensive gifts for your significant other, why not try your hand at making something meaningful? Why not make your own coupons that you’re significant other can redeem afterwards. Write things like: “1 hour massage” or “I’ll make dinner tonight”, etc.

Choose simple gifts:

Forget about grand gestures that cost a lot of money, at the end of the day remember it’s thought that counts. Instead of spending a small fortune on a bouquet of roses, rather go a single rose or their favourite chocolate.

Hand written Valentine’s Day Cards:

Instead of spending R100 on a generic Valentine’s Day card, why don’t you write and decorate your own card? Save money and say something straight from the heart. It doesn’t even take any skill, as long as it is made with love, your partner will get the message and feel the love. Some people put a lot of pressure on themselves and others as Valentine’s Day approaches, but just doing something small will show someone that you care.

Look out for Specials

On days like these, there are always great specials going on. Be sure to keep your eyes open for deals on movie tickets and snacks, or dinner specials. There are a lot of ways you can have a great time, without spending too much money.

Coupons

Coupons are another great way for you to save money – for premium services at a portion of the price, giving you the opportunity to do things that might normally be too expensive, allowing you to treat your partner to an unforgettable evening.

Valentine’s Day should be a day to celebrate love, not damage your future finances. Spend your money wisely, avoid the urge to splurge and rather focus on your loved ones, not the things.

However if you think you may have spent too much, contact Debt Sense Group today for more information on debt counseling.

What is Debt Counselling?

The National Credit Act, No 34 of 2005 finally came into operation on 1 June 2007.

The Act provides for a debt relief mechanism whereby Consumers, who are over-indebted, can apply for debt-review in terms whereof their debt repayment obligations are reduced. The aim and purpose of the Act is, amongst others, to assist Consumers to lead a normal economic life without being pressured or victimised by credit providers for payment in circumstances where they can no longer afford to honour their payment obligations unto their credit providers. Consumers will be over-indebted if, after providing for their monthly living expenses, are unable to afford their debt obligations. By availing themselves of the debt relief mechanism provided for in the Act, Consumers can, for example, prevent their assets, including their home, motor vehicle and furniture, from being foreclosed upon and attached by unsympathetic credit providers. Credit Providers are furthermore obligated to participate in the debt review process and cannot avoid it.

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Once a Consumer’s debt obligations have been re-arranged, they will be able to honour their payment obligations unto their credit providers in reduced instalments affordable to them.