January is always a tough time for consumers. Aside from surviving the usual economic challenges of low growth and high inflation, South Africans have to bear the consequences of spending beyond their means over the festive season.
According to one major bank, credit card debt in December 2016 leapt by 22 percent year-on-year. What’s more alarming is that card holders spent 52 percent and 51 percent more on entertainment and luxury goods, respectively.
How to avoid a bleak 2018
All indications are the trend is continuing into 2017. With junk status now officially conferred on the country’s sovereign debt, most of us can expect a bleak 2018. Political instability, coupled with one of the most protracted droughts in history, is not helping matters.
The only way debt-ridden consumers can survive the holiday hangover is to start the New Year with a strategy firmly in place. Here are 8 tips that’ll help you get into better financial shape in 2018:
Create a budget
The best way to manage your money is to create a budget. Make a list of your monthly expenses and offset it against your income.
Once you know exactly how you stand, you can make informed decisions as to what you can afford, and what expenses you have to cap, or cut completely.
Analyse what you owe to creditors, and pay off the most expensive debts first. These are the debts that have the highest interest rates, such as store accounts and credit cards.
If you can, try and pay a little more than the fixed monthly premium. It will shorten the loan term, and give you a bit of leeway if, and when, you have a bad month sometime down the line.
Set financial goals
Make a note of your long-term financial goals. It may be saving for a new home, second car, your retirement or your children’s education.
Research the best investment vehicles to realise these goals, and set up electronic payments that are activated as soon after pay day as possible.
Look around for special deals on basic items, such as food, clothing, toiletries and back to school items. Save up points earned in-store or for using your credit card, and use them to buy necessities when the January debt burden starts to bite.
Take advantage of the buy-one-get-one-free promotions, and make use of any coupons you’ve accumulated throughout the year.
Sell unwanted items
If you’re really in a tight spot and need cash for rent or school fees, consider selling unused items or pre-owned goods that are still in good condition. The easiest way to sell clothing, CDs, vinyl records, electronic goods or devices is online at Olyx or Gumtree, or via a mobile app like the Letgo app.
Lighten up on luxuries
Cut back on unnecessary spending. Avoid eating out at restaurants, going to the theatre or indulging in expensive alcohol and cigarettes.
In fact, unless entertainment is home-based, give the festivities a rest altogether. You’ll be doing your health and your bank balance a favour.
Join a car pool
Instead of taking your vehicle into work every day, consider joining a car pool. You’ll not only save on petrol and parking, you’ll be able to take a break from negotiating the traffic. If a car pool isn’t a practical solution, the Gautrain or MyCity buses are low-cost alternatives.
Use your assets to secure a loan
At lamna, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.