Ignoring the problem will not make it go away
According to Peter Atkinson, National Technical Portfolio Manager at the Financial Intermediaries Association of Southern African (FIA), who says those consumers who find themselves starting the year burdened by debt should seek the assistance of a qualified and experienced financial planner, who can assist them in creating a financial plan to pay off debt and start saving to ensure they become more financially stable.
“If you don’t have a budget or you’re not working to the one you currently have, then this needs to be addressed. If you are carrying debt, now is the time to revisit the budget and cut out anything that is dispensable.”
“Be ruthless and remember that there is a clear difference between a ‘need’ and a ‘want’.”
Atkinson says some consumers believe cutting down on insurance premiums is a good way to save, however, this is not the case.
“On the short term side, this could leave you exposed to a risk that you cannot afford, while terminating life insurance policies or medial aid may result in risk exposure as well as considerable penalties, which you don’t want to incur for the sake of the longer term plan.”
He says it is important for consumers to remember that a budget has two sides: expenditure and income.
“Consider the possibilities of earning a little extra income on the side – perhaps by offering a gardening service on a Saturday morning, or doing a short shift in a call centre in the evenings.”
“Or perhaps it is just a matter of cleaning up that outside room and looking for a tenant. You’d be amazed how much even a small amount of income can contribute to overall debt repayments.”
“However, for those who are so seriously in debt that the above does not offer a feasible solution, it is critical to act now and investigate the formal debt counselling process.”
“Ignoring the problem will not make it go away and will most likely result in a snowball effect with consumers finding themselves in even further debt,” concludes Atkinson.