Opting for Debt Counselling is a wise choice (Download PDF)

If you are feeling overwhelmed and feel that debt has taken over your life, don’t despair.
Download the below information pack which contains an info graphic that will give you a better idea of the debt counselling process and how we can we can help you obtain debt relief.

Download here.

Debt Review Information Pack (Download PDF)

Are you unsure of the debt review process?
Download the debt review process information pack which provides a high level overview of the steps to follow.

Download here.

Second to a house, a car is mostly likely the average person’s largest debt. Not all of us live within walking distance from work, or if we do, it might not be safe. In today’s society, a reliable car is a necessity. However, if you are already in debt, it makes financial sense (in fact, it’s crucial) that you honestly evaluate whether you can really afford that shiny new car, or should rather turn around to the Used Cars section.

We all want to drive a new car, but it is essential to remember that a car is never an asset. If you are already in debt, you cannot allow yourself to be fooled by the fact that you can afford the monthly payment on a new car. You will need to think long-term, and don’t forget the hidden costs.

Here are the main reasons why a car is not an asset:

  • A car generates a number of expenses and liabilities over time. Ownership costs include maintenance, loan payments, petrol fees and insurance. These will have a significant impact on your month-to-month finances.
  • A car depreciates in value. A new car loses about 20 to 25% of its value the instant you drive it out of the dealer’s store. Based on statistics, your car may lose about two-thirds or nearly 70% of its value after four years.

Buying a new car is not necessarily a good deal. Recent statistics show that one-third of car buyers sign up for a six-year loan at an average interest rate of 9.6%. Rather:

  • Drive a dependable “cash” car for a year (or less) and save.
  • If possible, consider using a lift club (car pool) or other modes of transport (bus, train, bicycle etc.).
  • If possible, walk if you live near your workplace or a store.

Many people could buy property with what they spend on annual car maintenance. Imagine what you could do with the money you would have spent (monthly) on your new car. If you want to become debt free, rather opt for a reliable second hand car.

Stuck in Personal Debt? Daily lifestyle tweaks that will help!

If you are trapped in personal debt, ignoring the problem won’t make it go away. Instead, it will only worsen your financial troubles. Many (if not most) of us are creatures of habit, and this applies to our daily spending as well. If we sit down and evaluate our expenses, we will realise that every day presents itself with various opportunities to save cents, which will turn into rands, and when applied consistently over time help us free ourselves from personal debt.

This article summarises a selection of the best tried and tested tips out there to keep within your budget and get on your way to a debt free life.

Read the full source article at  https://bit.ly/1hYk4yW on the Becoming Minimalist Blog.

  1. Get new quotes on your car, home and life insurance. Aim to get lower payments.
  2. Downgrade your DSTV package, or get rid of it entirely (latter recommended).
  3. Look for sale items at your local grocery shop. Buy generic brands where possible.
  4. Put a stop to luxury expenses, e.g. magazine subscriptions, newspapers or beauty treatments. These are not necessities and becoming debt free will be worth losing out on them.
  5. Supplement your income with part-time or temporary work and apply the extra income directly to your personal debt.
  6. Buy your most expensive staple groceries in bulk (e.g. meat, cheeses, bread). Draw up a monthly budget for additional items (fresh salad ingredients, fruits, etc.) at regular grocery shops.
  7. When in a restaurant, opt for water and don’t have dessert. You will save significantly. Opt for small appetizers instead of the expensive meal (it will be good for your waistline too!).
  8. Plan your trips better to save petrol.
  9. Give home-made gifts instead of expensive store-brought presents.
  10. Buy oatmeal, eggs or fruit instead of expensive boxed cereals (it’s healthier, too).
  11. Save on gym membership by walking or hiking, or using exercise videos.
  12. Make your coffee at home instead of buying it – those small amounts add up faster than you think.
  13. Pack your lunch daily.
  14. If you know you cannot control your impulses at certain retail shops, place yourself out of temptation’s way and do not window shop until you are out of debt.

The dangers of using a credit card

Nowadays, credit cards are nothing out of the ordinary: many people even have a few of them. This reality is, of course, with good reason. It is true that a credit card offers many advantages.
For example, it allows you to make large payments without the safety risk of carrying around cash. It’s convenient: you never have to search for an ATM or place yourself at risk in unsafe areas.
If you need a large sum of money urgently, you can get hold of low-cost loans via revolving credit. Probably the most important advantage is that you can build positive credit.

By using your credit card in a controlled manner, it can help you to establish credit for the first time, or rebuild credit if you had difficulties in the past.
Unfortunately, the ease of credit cards can be deceiving. Too many people do not realize just how dangerous credit card debt can become if not controlled.

Some of the biggest dangers of credit card use:

  • The high-interest rates and annual fees typically associated with credit cards often outweigh the benefits. It might end up becoming very expensive. If the amount you owe grows much faster than your ability to repay, which is the case more often than not, you will be left in serious financial trouble. To top it off, the savings offered by credit cards can be found elsewhere.
  • Your credit record is very vulnerable. Miss a few payments and the damage is done. Having a good credit record is crucial. For example, having a bad credit record will limit your ability to borrow money; it can impact your ability to rent an apartment, and even impact your insurance quotes.
  • Credit card debt sabotages nearly all your attempts to save any money. Credit card debt will ruin your best intentions to save up for retirement. It might even lead you to mistakenly believe you are saving up for retirement, but if you owe too many credit card companies, the money you think you’re saving isn’t really yours.
  • The credit card trap can deepen your debt. If you swipe your credit card without discipline, you may find yourself in big trouble before you even know what hit you. The more you swipe, the bigger your total balance becomes, and your monthly minimum payments will increase along with your balance.
  • One of the biggest dangers of credit card use might be the psychological trap: a credit card makes it possible to spend money that isn’t yours and live above your means. It is just too easy to swipe that credit card.

By all means, make use of this useful tool, but be aware of its pitfalls.

If you need a debt review speak to Zero Debt today for a free, confidential, no-obligation consultation.

The Power of Buying Second Hand

In today’s tough financial times, everyone is struggling to make ends meet. Many people dismiss second hand buying without a second thought, losing out on a powerful, untapped savings solution.
Second hand goods are often mistakenly associated with poor quality, which is not the case at reputable stores. In fact, the items sold at a respectable second hand store are often brand new (next time, look for the original price tag still attached).

It is not necessary to buy everything new. If you need to save a few rands, consider thrift shops, consignment stores, used book shops, etc.
Just be careful of falling into the trap of buying more than you need because the items are so cheap, or you might not be doing yourself a favour after all.

Apart from saving money, if you shop second hand, you can:

  • Help to reduce our carbon footprint: the environmental impact you leave behind in your lifetime. By buying second hand, you are re-using and therefore reducing the need for new products.
  • Give back to the community. The proceeds of many second hand mission stores go to community projects, e.g. homeless children, people with terminal illnesses or disabilities, animal shelters and more.
  • Spice up your Home Décor without emptying your pocket. Give used bedroom suites, tables and other furniture a second breath of life with a new coat of paint and some creative touches.Or become part of the popular vintage trend with and old lamp or clock.

Be sure to only shop at reputable stores that can guarantee the quality of their products. A good second hand store needs to have systems in place to ensure that the items you buy are not damaged,
otherwise your intended saving might end up being a waste of money.

There are some products that you should rather buy new, for example (see the full list at https://read.bi/1loT5aG):

  • Bike helmets
  • Cribs
  • Laptops
  • Blenders
  • Camera lenses
  • Child car seats

These you should definitely buy second hand, though:

  • Bicycles
  • Textbooks
  • Household appliances
  • Toys
  • Furniture
  • Wedding attire
  • Pets

Unleash the power of second hand buying and be on your way to becoming and staying debt free.

You may be wondering what is a debt review or what is the function of a Debt Counsellor? Well, here’s a brief explanation:

Recently a new Act was made into law called the National Credit Act (the NCA).

In the NCA (which talks all about credit and credit accounts) there is a section (Section 86) which deals with what to do if a consumer has too many debts, too many obligations and not enough money to pay for everything. This section specifically mentions something called debt counselling. Debt Counselling would be advice about your debt from a qualified debt counsellor. A Debt Counsellor would be registered with the National Credit regulator (who is an industry watch dog – of sorts.)

The NCR:

Their job is not to make the industry work (they regulate, not control) but rather to try stop naughty creditors (and recently some Debt Counsellors who do not play by the rules) from being too naughty.

They send a lot of sternly worded letters, visit and of course, keep stats about the industry.

They also register Creditors and Debt Counsellors who offer debt review services.

Debt Review:

A Debt Counsellor will, normally, meet with a troubled consumer and go through their financials with them. They like to get you to fill in a form called a Form 16 which sums up your debt situation. Most prefer to have you do this in advance.

(in some cases the consumer may not be able to go to the Debt Counsellor so they might work with one another via the internet, email or over the phone.)

The Debt Counsellor will want to get as much info from the consumer as possible about what debts they have etc. (so take your statements with you). Most Debt Counsellors will help give you advice for free (though by law they can charge you R50 for coming to visit them). They should (under the Consumer Protection Act) ask you to sign a contract which explains what they will and won’t do if you want to enter debt review. If they don’t feel free to ask for one. This is something different from the form 16 but some clever Debt counsellors are combining the two to save time.

So take that first step. Simply call us directly at 086 111 3749 or contact our supportive debt counsellors via our contact page. Dont have the time? Request a Free Call Back and one of our counsellors will contact you! Zero Debt is a certified Debt Counselling company.

It seems that over 2000 consumers feel they have been harassed by the banks while under debt review.

The number is undoubtedly higher however this petition did not receive support from the Debt Counsellors Association of South Africa ( DCASA) nor from the Alliance of Professional Debt Counsellors (AllProDC)

So the number (though high- representing about 1/3rd of all the people applying for debt review in a single month) may therefore only represent those DCs and some consumers who are not closely affiliated with these organizations.

DCASA stated that they did not want to support the petition and thus upset their good working relationship with the Banking Association of South Africa members (BASA). They feel that matters should be dealt with on a case by case basis not in bulk.

AllProDC were seemingly a bit preoccupied with their growth as an organization during the petition and could not give it too much attention. At present they are trying to get all their members to sign their Code of Conduct as a priority.Sadly many consumers who are under debt review are seemingly discriminated against. Often these consumers face a higher level of collection pressure than other consumers. They are litigated against faster and if you take the time to read the many comments by those who joined the petition you can feel their pain and frustration.

So take that first step. Simply call us directly at 086 111 3749 or contact our supportive debt counsellors via our contact page. Dont have the time? Request a Free Call Back and one of our counsellors will contact you! Zero Debt is a certified Debt Counselling company who offers free no-obligation debt reviews.

A New Budget:

The Debt Counsellor will also help the consumer set a new budget for household expenses since this is often totally overlooked by consumers.

It is very important that consumers then stick closely to this suggested budget amount if they want their debt review to succeed.

The Debt Counsellor will then use computer programs and phone calls, Faxes and emails to the various Creditors to try make a deal with them that they are willing to accept.

They don’t have to like it but if they do that’s good.

If they like it they will send letters to the Debt Counsellor saying they are happy with the plan.

If not they will send letters saying they would rather have…something else.

Either way (and let’s be honest it is going to be hard to make everyone happy) the matter get turned into a court application.

This is done under section 55 of the Magistrates Court Act since the NCA doesn’t cover the court application in detail or how is should be done.

The application is then heard in the Magistrates Court near where the consumer lives.

It is good to note that after 60 days of the review the Creditors can approach another court to try get a judgement against the consumer for the debt. However if they do so the consumer is then allowed to defend that new legal action and ask that they go to the court where the debt review is happening and that the creditor pay costs for trying this new legal action.

One reason why a Creditor might try this (other than greed or being nasty) is if they genuinely feel that the debt review will not work or if the consumer is not sticking to the debt review proposals

(if they are not paying the right amount or not paying each and every month).

Many Creditors have tried to take action against consumers who have assets to try get permission to sell these assets on auction rather than let the consumer pay over time.

This is a short term solution that some banks feel is worth it (since they can then claim insurance against the loss and even if there is a shortfall on what the consumer owes the judgement lasts for 30 years so they can take their time in trying to get the balance of the bond or vehicle finance back from the consumer over time).

If the consumer does not fight against this legal action though they will probably lose their assets even though they are under debt review. One factor in this is making sure that Creditors have your latest address so they can send any legal documents to the right address. This then allows the consumer to defend the matter. Consumers can either go to court by themselves (cheaper but nerve wracking) or they can get legal representation (an attorney or advocate) which is more costly.

SO back to the Court where the debt review application was made:

The Magistrates Court then will rule on the proposal as made by the debt counsellor . The creditors are also welcome to come to court and object or ask for more money etc (normally they just delay matters or ask for more money but can’t say where the money should come from.) This will delay the court ruling. The Courts are very busy these days so this can be a long procedure. Some matters have taken up to 3 years in the past. The good news is that these matters are now going faster and faster as the courts become more familiar with the applications. If the Magistrate understands and likes the proposal they will make it an Order of the court. Normally this is when the consumer needs to be present to say they understand how serious the matter is and to commit to the process and sign the Order.

The Court Order:

Once a Court Order is granted as per the proposal then this is sent to all the creditors and the consumer must make payments as per the Order each month with no deviations.

This is very important. Any deviation could invalidate all the work that has come before.

Then as time goes by the consumer should get monthly reports of how their accounts are doing.

So take that first step. Simply call us directly at 086 111 3749 or contact our supportive debt counsellors via our contact page. Dont have the time? Request a Free Call Back and one of our counsellors will contact you! Zero Debt is a certified Debt Counselling company.