As month end approaches most of us look forward to receiving our well deserved salaries. On payday, money comes into your bank account and your balance looks healthy for the first time in weeks. What happens next is the depressing part, namely, debit Orders.
Payday Debit Orders Eat Up My Whole Salary
As the SMS’s from your bank flood your inbox, your balance makes its way to zero. For many middle class South Africans, their income lasts a measly 5 days. The most common debit orders are for insurance, medical aid, debt repayments, subscriptions, cell phone and internet contracts.
Monthly debit orders can be seen as fixed payments. The higher your total debit order amount, the less cash you are left with for all other living expenses. It is this imbalance that causes many South Africans to become over-indebted. Over-indebted means that the monthly salary is not enough to cover all expenses, which include debt repayments, service agreements and all other monthly living costs.
What Can I Do To Reduce My Monthly Debit Order Payments?
If you feel that your monthly repayments are becoming too high and not leaving you with much cash, you have a few options:
Don’t Make Use Of More Debt
By using your credit card or taking out new personal or payday loans you only increase your monthly debt repayments. These repayments will use more of your income and leave you with less to live on. You should be aiming to settle off smaller, expensive debts where the interest expense and fees are high.
Cancel Unnecessary Subscriptions
Try to cut down on subscriptions that you don’t make use of or are luxurious. Cancel your unused gym contract or DSTV contract that you hardly use. Choose a more affordable cellphone contract to save extra money.
Consolidate Your Debt
You can consolidate your debt in two ways. Firstly, a consolidation loan is a large personal loan used to pay off smaller debts. To qualify for one you would need to have a high credit score, relatively high affordability as well as being up to date on current debt repayments.
The other option is called debt counselling. Debt counselling is a process whereby a debt counsellor formally negotiates with all your credit providers to reduce your monthly repayments and interest rates. This option is available for consumers who are over-indebted.
Approach another medical aid company or insurer to see if you can get the same cover for a better price. Many insurance and medical aid companies are willing to beat your current price in order to gain new clients. Perhaps it’s also time to look at a new banking product. Either downgrade your current account or look at a new bank which offers more affordable fees for the same service.
There are many ways to save money, we just need to prioritize these and take our budgets seriously. There are plenty of apps and programs which can help you to manage your money. It is also wise to do proper research when choosing between service or credit providers.