Don’t buy bread on credit
If anything untoward were to happen now, some would find themselves in financial difficulty as they will be unable to pay for unplanned costs or even service existing credit agreements.
This will force them to take out more loans, further increasing their financial burden. Ian Leyenaar, CEO of FNB Namibia commented “If you are occasionally making late payments or only paying the minimum on credit cards, it is very likely that your debt situation is out of control.”
Leyenaar said: “First and foremost, you need to acknowledge that you have a problem and are in a debt spiral and then actively start controlling your finances.
To do this you need to stop increasing debt.
This means adjusting and living within your means and changing your spending habits; you and only you are able to do this. Unfortunately sacrifices are your only option!”
He said “full knowledge and understanding of your finances is crucial. This will allow you to do proper planning and to accept responsibility for your current financial position. “Many people don’t even have an idea of how much they spend and on what, let alone what they owe.
The best place to start is by drawing up a simple budget; this is a document that reflects your income and your planned or known expenses, including debt repayments.”
“Write down every expense for the month, including groceries, clothing, electricity, rent or bond and credit card / debt repayments.
Once this has been done, you will quickly see if your expenses are more than your income and, if so, that there is an immediate need to cut down on spending, to balance your budget and clear your debt” he said.
“Do you really need new clothes, or is it just something you want and that can wait? If you find that you are looking at a major debt problem, immediately make changes to your budget, spend less on non essential items and if need be, approach your bank or other debt providers to find a solution such as negotiating a longer repayment term.
They are there to help and they will advise on the best way to manage your finances.
It also helps to find out what the interest rate is on each of your credit cards, loans or accounts and then repay those with the highest interest rates first.” “If you can barely cope now with the current low interest rates, you will be in a dire position once interest rates increase,” concluded Leyenaar.