It happens to all of us: emergencies and unplanned events pop up and you find yourself struggling to afford repayments. Often, this causes feelings of depression and stress, but you don’t have to feel this way; you can be proactive and positive when tackling debt. Here are a few tips to get you through tough financial times:
Know the difference between “want” and “need”
Often, we buy things without even thinking about it. But, is that morning coffee something you really need, or did you buy it, because the café is where all your colleagues meet before work? When you don’t distinguish between wants (things that are nice to have, but that you could do without) and needs (an essential), you might find you get through your income pretty fast.
Analyse your bank statements
The day before payday, go through last month’s bank statements. Write down all the swipes on your cheque or savings account, including where and for what it was. Next, write down any amounts of cash you withdrew. Once done, go through each item and determine if you spent on a want or need. If it was a want, try limiting future spend. If it’s a need, perhaps you could get it cheaper elsewhere?
Also remember to analyse your statement for unauthorised debit orders. If you find any, contact your bank to request a cancellation and investigation of a refund.
Draw up a budget
A budget is the first step to financial security. As before, the day before payday, analyse your bank statement and note your monthly expenses. Total up all expenses on needed items and on repayments to credit providers. Subtract this amount from your income. The amount you’re left with will let indicate how much you have for wants and savings. If you have no money left, it’s time to contact your credit providers, because you could be in financial difficulty.
Make regular payments
Your credit rating depends on you making regular payments. Keep in mind that even if you make lump-sum payments every now and then, you’ll still look like you’re struggling if you don’t make up for missed payments in-between.
Keep a sensible credit limit
High credit limits make it easy to overspend. Keep your credit card and overdraft limits relatively low, only using high limits for emergencies.
Use only one source of credit
Avoid having multiple sources of short-term debt. It’s easier keeping track of your spending using an overdraft and only one credit card.
Add up interest
Before buying something on credit, multiply the repayment amount by the number of months you will be paying it. Compare this amount to the cash price. The difference is what you will pay in interest.
For more help overcoming debt, contact our Debt Care Centre; we’ll help you with your financial challenges, so you can get back to focusing on your Next!