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HERE’S A PLAN TO MANAGE YOUR DEBT You cannot begin to save for the future if you do not have control of your finances, and the first thing to do is to control and, if possible, reduce your debt. FOR most people, some debts are unavoidable. However, you and other South Africans now face a unique challenge: consumerist culture and the relentless selling of instant gratification. Combine that with easy access to credit, and it becomes the perfect storm of losing control over your finances. That is why debt management is an essential strategy to bring and keep your financial situation under control. Implementing an effective, ongoing debt management plan can ensure that you: ● Become empowered to manage your financial situation proactively.
● Avoid losing control of your debt. ● Find a way out of indebtedness. ● Stay on track to reach your financial goals. Carla Oberholzer, debt adviser at debt counselling firm DebtSafe, says: “Having authority over your finances can turn your money into a powerful ally. But, if debt is left unchecked, it will become your ruthless enemy.” Oberholzer says an effective debt management plan consists of the following five steps: Step 1: Revise your financial situation The first step is to get an idea of
your current financial situation. Answer these three questions to get your first debt management step in check: ● What is your monthly income after deductions? ● What does your payment history on your bank statements reflect? ● What does your credit record portray? (Did you know that you can pull your record for free, every year, at any registered credit bureau?) Step 2: Compare your current income to your debt The second step is to calculate your current debt-to-income ratio. Here’s
