With every new year, comes a fresh start in a personal and financial capacity. 2022 was one of the most challenging years for South African consumers financially and it has pushed many individuals and families to their limits. In 2023, aim for a fresher, better start!

Assess your personal budget

With every new year, comes a new budget. We recommended that you re-evaluate your budget each year, and cut down on unnecessary and luxurious spending. Most importantly, you need to review your budget each month. If you overspend, it is important that you take control of it immediately. With each month you overspend on your budget, you are reducing your savings opportunities. We understand that finding the perfect budget ratio is difficult. Interestingly enough, the most commonly used method is the 50/30/20 budget ratio, which is is considered one of the most effective.

Focus on paying your debt each month, on time!

With the rise in total consumer debt from R1,9 Trillion to over R2,2 Trillion, South African consumers are struggling to cover basic expenses. This causes consumers to become over-indebted. In essence, if you are borrowing money from one lender to pay another lender, you are most likely to make your situation worse. 

Because maintaining a good credit score is the most important aspect of your financial life. You will need to make your repayments on time and in full each month. If you have any arrears (missed payments), we recommend that you catch up on these payments over a period of 3-4 months. 

If you received your annual bonus, dedicate some of your money towards paying expensive debt. For example: expensive debt is considered to be payday loans, personal loans and credit cards. Paying this debt first will cover some of the fees and interest on the accounts and may leave you with some extra cash. If you have any defaults or judgements against you, it is important that you get these cleared from your name as soon as possible. 

If your repayments are too high, consider consolidating your debt!

If you find that your monthly repayments are high, consider debt consolidation options. Currently in South Africa, there are two debt consolidation options available to consumers: 

• Consolidation Loan – This is essentially a large personal loan that is used to settle smaller debts. You are essentially left with one monthly repayment and one loan. Consolidations loans are effective but have strict qualification criteria due to their size. Consumers should be up to date with all payments and have a high credit score to qualify.

• Debt Counselling – This is a solution where a debt counsellor would formally negotiate with your creditors. Monthly instalments are consolidated into one, lower monthly debt repayment. Interest rates are also reduced making the debt more affordable to repay. Consumers need to be over-indebted, can be in arrears and have a low credit score.

If you are seeking assistance regarding your debt or looking for some advice and tips, contact us. Vantage provides a free financial assessment in order to better understand your situation.