Without fail there is a kind of madness that grips consumers all across the globe during the festive season every single year – the need to shop. The reality of debt is drowned out by fantastical advertising and mega deals and soon we find ourselves spending money we don’t have. According to statistics, South Africans didn’t hold back their credit cards during Black Friday and Cyber Monday last year even though South Africa’s economy is shrinking and unemployment is at an all-time high. At DebtCare we see more new clients seeking help with the repayment of their outstanding debt in January and February than during any other months of the year. Suddenly there’s no money to pay school fees, pay the instalment on the home loan or buy the basics you need to run the household.
8 tips you need to follow now to survive Janu-worry
It’s time for a wakeup call. Go through your bank statements.
This is going to feel like a cold shower in the middle of winter, but you need to go through your bank statements and look at how much money you have left for January. Once you know how much you have in the bank, make a list of essentials (fixed expenses) that need to be paid – rent, home loan, car payments, school fees, debt. Then make a list of variable expenses (expenses that don’t cost the same amount every month) – groceries, cellphone, petrol, utility bills. It’s important to pay your essentials first. Whatever you have left in the budget can then be split between your variable expenses.
Forget about a consolidation loan.
Consolidation loans sound too good to be true because they usually are. If you’re not able to manage your finances now, no loan is going to change that. The root cause of your financial distress needs to be addressed, whether it be impulse buying, a lack of understanding of personal finance management, denial, etc. We regularly deal with clients who decided to go down this route and end up in more debt because they spent the credit on items they didn’t really need, but felt they could finally afford because they had access to credit.
Don’t be scared to negotiate lower premiums.
January is a good time to review your medical aid and insurance policies. Remember your car is a year older, which decreases its value so your premium should reflect that. If you’ve been a loyal, consistent customer for any amount of time give your provider a call and ask them if they can lower the premium. Any amount saved here helps loosen up some money need for other financial obligations you have. If your kids are heading back to school, ask the school if they charge less if fees are paid upfront for the year. If you can afford it, go for it!
Pay the minimum amount, but never default.
Besides putting assets like your house and car at risk, defaulting on payments also hurts your credit score. A bad credit score influences all future financial applications and could cost you future employment. It’s becoming common practice for employers to check credit records because it gives them an idea of whether or not you’re able to handle responsibilities.
Cut costs on variable expenses.
Variable expenses are those that don’t cost the same every month. This could include groceries, petrol, cellphone and your utility bills. If you need to cut costs, this is where you need to start. There are several ways to save money here. For example, making a shopping list of essentials you need before heading into the store will help you avoid the mindless adding of items to your basket. Shopping on an empty stomach should also be avoided because we tend to buy more food than we need. You can also look at creating a lift club or carpool with other parents whose kids go to the same school as yours, or even with colleagues that live in your area. Set an early screen time cut-off after which you don’t use your cellphone. Get creative and you’ll soon see how you can save on your variable expenses.
Join free loyalty programmes like Cashback World.
There’s a smorgasbord of loyalty programmes to choose from these days. Some like Cashback World give you discounts, coupons, freebies and points to convert to things like petrol vouchers. Loyalty programmes are a lot more than just swiping your card every time you shop. You have to work the programme to maximize your benefits! Look out for ways to double or triple your points, get more coupons and secure more savings.
Don’t buy on impulse. Always compare prices.
Doing your research before you head to the store could save you a lot of money. A quick check online can give you a real-time price comparison on virtually all products, so it pays to know where you need to shop in order to save. The time spent on researching prices will also give you a cooling period in which you can decide if you actually need the item(s) you’re looking for.
Seek help if you’re in over your head.
There is zero shame in admitting you need help keeping your head above water financially. The quicker you get help and get a grip on your money problems, the quicker the road to recovery begins. You also avoid doing permanent damage to your credit record.