In an article published on a well-known online publication this week, statistics from a survey done by the World Bank shows that South Africans were the biggest borrowers in 2014 worldwide.
This is extremely disconcerting. In our survey done earlier this year, statistics show that 51% of participants weren’t able to meet their minimum debt repayments in January.
13% of respondents indicated that they couldn’t make any payment. Creating a scenario where they will have to make a double payment the next month to catch up the arrears as soon as possible. To avoid this dire snowball effect it’s important to refrain from using debt for daily living expenses.
Accounts in arrears for a few months negatively affect one’s credit profile. All is not lost though; just stop living beyond your financial means.
Not living according to a budget is perhaps the most prevalent financial slip-up that individuals make when managing their debt. It’s important that people realise that getting out of debt and staying out of debt depends on living to a strict but realistic budget. Ideally, the budget that you create should account for your debt payments.
Abusing the power of your credit card is another example of why many people struggle with debt. We conveniently swipe the credit card even though we have enough cash to pay for it. Rather pay by cash or debit where possible for purchases such as utilities and groceries. Buying items on credit adds-up, and affects your credit balance significantly.
If you take more credit to pay off credit – such as taking a loan from one institution to pay off a loan you received from another – leads to an endless cycle of debt. When you feel out of control, get help from a financial advisor or planner. If you find yourself over-indebted your best option would be to contact DebtSafe for a free debt assessment.
Another astonishing result from our survey was that 55% of respondents don’t have a savings plan in place. If you are not saving, it means that you are making debt. While debt is something many individuals cannot live without it can be managed. Careful planning, knowing exactly where your finances go and altering spending habits to include only the necessities can help with living debt free.