As the festive season draws near, so do the warnings from financial experts to avoid overspending. Yet, without fail, too many consumers end up heavily in debt, even falling into deep depression as a result. South Africans are already taking strain with the VAT hike and ever increasing petrol prices which has a knock‐on-effect on the general cost of living.
If you’re a consumer who is either drowning in debt or you feel as if you’re about to, we have some practical advice on how you can keep your head above water, at least for the foreseeable future.
Cut out credit and loans
Credit and store card debt accounts for a huge portion of consumer debt in South Africa. Research has even found that many people use their credit cards to pay for basic monthly living expenses. But this is an especially dangerous practice, warns independent personal finance expert, Marc Joubert.
“Look at how you can work around certain necessary expenses. Carpool instead of driving on your own. Shop around for less pricey alternatives to your groceries,” he suggests. It might sound insignificant but putting things like this into practice will soon result in a drop in your monthly expenses.
There are times when spending seems unavoidable, such as when the fridge decides to pack up in that awful week before payday. Before you reach for that credit card, do some homework on alternatives.
Could you make do with a second‐hand appliance (at least until you’ve saved enough to buy a brand new product)?
You can also consider a different purchasing model such as Teljoy’s rent‐to‐own. This is a month-to-month contract that allows you to pay a single monthly fee for a pre-determined period with the option to take ownership. If you don’t have the cash up front and don’t want to use your credit card and get into debt but desperate for new appliances, electronics and furniture this could be the better option for you.
This also gives you financial flexibility, you’re not locked and unlike a credit agreement you have the option to upgrade, downgrade or cancel at any time to suit your financial circumstances. With the high standard of living, there’s an increasing need for people to spend smarter.
Don’t be consumed by debt
The day‐to‐day demands of life mean that consumers might constantly feel as if they’re standing on the edge of a mountain, looking into a deep dark abyss of debt. So be realistic and wise in your choices and habits.
If you’re in need of debt counselling, visit the Debt Counsellors Association of South Africa where you will find information about accredited counsellors.