Understanding and managing debt is an important life skill. Most South Africans must apply debt guidance and management measures in their day-to-day lives.
Navigating Debt Management: Tips and Strategies for a Debt-Free Life
Good debt management is needed to avoid the stress of uncontrolled debt, including being hounded by creditors, threats of furniture being repossessed, threats of home eviction and constantly being in arrears on repayments.
The simplest solution is not to make debt but very few people can pay cash for a car or a house. It would also take far too long for them to save the cash needed. Most people will have to borrow the capital needed from a bank or financial institution.
If you buy a home that you can afford, you not only have a place to stay but also have an asset that will grow in value over time. If you can limit your debt to only your home loan, then you will be applying good debt management.
On the other hand, a car is a depreciating asset as it only loses value over time. Although they are a necessity for most car owners, cars are expensive to run and maintain. Where possible, avoid borrowing money to pay for a car.
Debt Management Means Being in Control of Your Finances
Debt management needs discipline, financial responsibility, and careful planning. To effectively manage your debt, you need to know what your real living costs are and how much income you have. This means that you must create a budget.
Write down your income and all the money you pay out over a week or month. Essential expenses, like housing, food, power, water, and transportation, must be paid first. List all your debt repayments, including credit cards, loans, and short-term accounts. If possible, pay more than the minimum payment.
In addition, build an emergency fund by saving a small amount of your income each month to account for unexpected expenses. Savings can stop you from taking on more debt.
Practical Debt Management Tips
Assess your budget to see which expenses you can cut back on. Perhaps you can eat out less, drink or smoke less or buy less expensive products. The money you save from cutting back on non-essential spending can go toward paying your debt off as quickly as possible.
To make a larger dent in your debt repayments, pay extra on the debt with the highest interest rates.
Look for ways to earn an extra income. Take on after-hours, part-time, or weekend work. Earmark the extra income for paying off your debt and pay it off faster.
If you are struggling to keep up with your debt repayments, contact your creditors and negotiate lower interest rates on your loans or credit cards. This can reduce the total cost of your repayments and make it easier for you to manage.
A simple type of debt management is using cash or debit cards instead of relying on credit cards. This helps you avoid accumulating more debt and encourages mindful spending.
Before taking on any new debt, ask yourself if it is essential or if you can do without it. Make 100% sure you can afford the payments and only borrow what you genuinely need.
How Debt Review Can Help
Debt review is a formal debt restructuring process for South Africans struggling to make ends meet at the end of each month. It was created under the National Credit Act 34 of 2005 (‘NCA’) and was the government’s answer to the rising problem of consumer debt and the chronic over-indebtedness that plagues many South Africans.
Debt review was built with you, the consumer, in mind, and is highly regulated and can only be conducted by an NCR-qualified Debt Counsellor. The process allows a debt counsellor to renegotiate and restructure your debt to an amount that you can afford each month.
Your only requirement during the debt review process is to continue to pay your reduced monthly instalments, and once your plan is complete and your debt is paid off, your credit record is cleared, and you can start living debt-free.
How the Debt Review Process Works
The process is much simpler (and less daunting) than you might expect. It is summarised in a few easy steps:
Step 1: Request a Free Consultation from NDC
One of our professional consultants at National Debt Counsellors contacts you and takes you through a free financial assessment. Don’t worry, this is completely confidential!
Step 2: Complete Your Application Form
If you qualify for debt review, we send you an application form (Form 16) to complete and sign.
Step 3: We Notify Your Creditors
We notify your creditors that you’ve applied for debt review. From here, you and your assets are immediately protected under the National Credit Act.
Step 4: We Negotiate a New Payment Plan for You
This is where the magic happens. We negotiate your loan agreements with your credit providers and restructure your repayments to an amount that’s affordable for you.
Step 5: Pay a Single, Affordable Monthly Instalment
Once we’ve handled the above steps for you, you begin paying one easy monthly instalment via an accredited PDA (Payment Distribution Authority), which distributes the funds to your credit providers.
Step 6: We Make the Approved Plan an Order of the Court
Our panel of Attorneys apply to the Magistrates Court on your behalf to make your restructured repayment plan an official order of the court and ensure you remain protected during the process.
Step 7: Your Debt is Paid Off and Your Credit Record is Clear!
Slowly but surely, you’ll pay off your debt. Once it’s repaid, we issue a clearance certificate and notify the credit bureaus to clear your credit record. You are now able to live in financial freedom! Cue the budget-friendly celebration.
Now that we’ve covered in detail what debt review is, let’s look at how you can complete the process and attain your financial freedom.
Why Debt Review with National Debt Counsellors is a Good Idea
The debt review process has a lot of benefits, the most significant is that it allows you to repay your debt in a structured and sustainable way. Your debt counsellor assesses your budget, considers essential expenditures such as groceries, housing, education, and transport, and then works out how much you can afford to pay going forward.
Here are some of the other main reasons you should consider working with us to help clear your debt through this process:
No More High Amounts
Your monthly repayments are reduced to an amount you can afford, which helps you slowly but surely step out of debt and into financial freedom.
We Cover You (and your goods)
We provide immediate protection to you and your assets (including your house and car), so there’s no need to worry when you’re under the debt review process.
We’re the Ultimate Middleman
We negotiate with your credit providers directly, so you don’t receive any more harassing phone calls.
More Peace, Less Stress
We negotiate lower interest rates on your behalf, and we extend your repayment terms. This means you get a bit more breathing room as you begin moving towards more financial stability.
We’re Comprehensive from Start to Finish
Once you’ve cleared your debt, we apply to clear your credit report. So, all you must do throughout the process is make your payments. We do everything else on your behalf!
The ultimate reason to apply for debt review is simply to get on a better financial wicket overall. To live debt-free is the goal, and with debt review it becomes possible.
The Road to Living a Debt-free Life with National Debt Counsellors
Becoming debt-free takes discipline and dedication, so, stay motivated and focused. Keep your eyes on the reward, which is a debt-free, worry-free life. Remember, becoming debt-free takes time and perseverance.
By applying good debt management strategies and making carefully considered financial choices, you can gradually work off your debts and enjoy financial freedom.
If you’re already over-indebted, then seek the support of a debt counsellor. A registered debt counsellor will give expert advice and guidance. and ensure that you get legal protection.
They will help you navigate the debt review process. Don’t face over-indebtedness alone. National Debt Counsellors help thousands of South Africans to regain financial freedom and become debt-free. Contact us today for a free, no-obligation assessment of your financial situation.
