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Let’s face it whether you’re in debt or not we could always use some extra money at the end of the month, to put away for emergencies or for the future, but this is easier said than done. For many South Africans saving money isn’t something they think about or its thought of as daunting and sometimes almost impossible task. To truly be effective at saving money needs to become a habit, a ritual you do without even thinking about it. But to do that you need to replace your current bad financial habits.

So how do you know if you have bad financial habits? Well here are a list of the 10 most common bad financial habits South Africans tend to have.

Habit no. 1: Not having well-balanced spending

Have a look at your current expenses and see how many of your current expenses can be avoided. How many are actually wants and not needs? Things like clothing accounts, a second cell phone contract, satellite TV, nights out, holidays and luxury purchases are often seen as needs or justified as needs when in fact you could easily live without them. Especially in times when you need to scale down. Have a look at your monthly purchases and you may be surprised at your spending priorities.

Habit no. 2: Not having a budget

Setting a budget not only puts you in control of your spending but gets you into the habit of limiting your spending as well as getting used to the flow of your money. By living on a healthy budget you’ll be able to reach all of your financial obligations without stressing every time you swipe your card. Living on a budget doesn’t have to be a punishment. Budgeting can help you identify unnecessary expenses, save more and worry less. Don’t work harder – work smarter.

Habit no. 3: Not checking your bank statements

Going through one’s bank statement once a month isn’t something that excites a lot of people. It could, however, mean the difference between a good and a bad financial month. It is very important to know about each and every debit order that goes off on your bank account. You could very well be paying for something that isn’t yours or something you don’t need.

Start to familiarise yourself with the cost of transaction fees on your bank account. You could save money just by moving debit orders to accounts that charge less, knowing whether to swipe or draw and making payments from the right accounts.

Habit no. 4: Falling behind on payments

The moment you fall behind on payments, you are at risk of becoming over-indebted. Each month the amount of debt that needs to be repaid will become even larger and eventually unattainable. This will leave you with huge amounts of debt that just keeps piling up.

Habit no. 5: Paying debt with debt

While this can be an effective way of managing your debt for some people consolidating your debt into one montly payment without the proper advice or due dillgence can leave them in an even larger financial hole. If you’re looking to consilidate your debt make sure the new debt amount and interest rate coupled with repayment is a reduction on the cost that you would have incurred should you have stuck with paying off smaller loans individually over time.

Habit no. 6: Paying back debt late

If you have no money troubles but pay your bills late, your credit score will drop. That means current creditors can raise your rates or cut your credit lines, and future creditors can offer higher rates or deny you. So even if financial problems didn’t cause your late payments, those late payments could trigger financial problems, especially when late-payment fees kick in.

Habit no. 7: Taking out pay day loans

Payday loans are quite possibly the most dangerous financial decision that a person can make. Once someone gets sucked into the payday loan cycle, it’s hard to get themselves out bar some sort of intervention. They often need the next payday loan to help pay for the last one and this endless cycle of mounting interest will quickly rack up your debt until it’s completely unmanageable.

Habit no. 8: Using credit without understanding how it works

Some people don’t realise that products bought on credit could cost you more than twice the original price. It’s much smarter to save for the products you really need and to buy them once off. Make sure you understand how the interest rates work on the credit agreements that you enter. You might just realise that it isn’t worth the risk.

Habit no. 9: Not saving for emergencies, retirement and education for your children

These savings tie in with your monthly budget. Not saving for emergencies could ruin your entire budget. It’s important to save for expenses that happen unexpectedly. Create an account for each one of your children and start saving for their education as soon as possible. It is compulsory to put away a realistic amount for retirement every month. Start today! Saving is a lot less stressful than running out of money.

Habit no. 10: Not Tracking Expenses

Many small expenses can add up to a lot of money at the end of the month that can easily eat away at any budget. For example, that R30-per-day coffee habit, or the R400 per month gym membership that goes unused, or the R100+ charges for apps, music, or movie downloads those small charges you forget about can quickly reduce your disposable income. Those small expenses could have been put to better use in a savings account or helped you pay off you’re debts faster.

Debt Review Solutions

For some people changing their habits simply isn’t enough to get out of the financial deficit they find themselves in. Fortunately, there are solutions if this is the case. If you are having difficulty covering all of your debt payments each month then consider requesting debt review with us at DC Debt Clear (Pty) Ltd. Our trained Debt Counsellor can help yo reduce your instalments, protect you against legal action from Credit Providers, provide you with a manageable repayment plan and reduce your financial worries.

Contact us here.

Let’s face it, times are tough, with junk status and the state of the economy we all need to start running a tighter ship and cutting out a few unnecessary expenses. For single-income families, this can be especially true as one pay cheque doesn’t seem to go as far as it did a few years ago.

If there’s one thing money-saving moms on a single income know, it’s how to stretch a paycheck. They can pinch pennies and cut expenses like no other and yet still make it seem as if the sacrifices were not that big deal.

So where do you start?

If you want to be a smart saver there are simple ways to cut costs. Use these 10 ways money-saving mums stretch their family’s paycheck to manage your family’s budget without you (or Abe) feeling the squeeze.

1. Clip Coupons

Everyone can save money on groceries and regular purchases when you use coupons, it’s just like getting a free bag of money. You might think of vouchers as something you have to clip from the newspaper but many coupons can now be found online. Coupons aren’t limited to food either. You can use them for clothes, pet supplies and computers, just to name a few. These vouchers can be found by a simple google search or apps like vouchercloud by vodacom.

2. Buy Generic

“Generic” isn’t an inferior version of a product, but merely non-branded products. Generic versions of everything from groceries to medicines are available at deep discounts.

If you’re worried about your children’s reaction to giving up name brand foods, try a taste test without telling them. Buy the store brand version of their favourite cookies and see if they notice the difference. Chances are, they won’t. After your tests, you can slowly slip in more and more generic purchases and see how far you can get away without them asking any questions.

3. Get Cash Back

Put money in your pocket for items you already buy. Cash back programs like Absa Rewards, eBucks and UCount give you money back on the purchases you make from your favourite stores in terms of points. It’s a great way to money back on things you always buy from groceries to petrol and in now time you may rack up enough points for anything from a flat screen TV to a well deserved holiday.

Just remember to use these types of cards with caution, though, so you’re not spending more just to get a portion of your money back.

4. Make Your Own Toys

There are toys you can’t pass up on the toy aisle. Then there are those you can make right at home. Homemade finger paint and Play-Doh are just two of those do-it-yourself projects that can save you money.

Making your own toys also provides double the entertainment, one as a craft and one as something to play with when you’re finished. It also gives you a reason to sit down and spend time with your kids and encouraging their creativity.

5. Pack Your Spouses Lunch

When money-saving mums pack their kids’ lunches, they also pack an extra one for their spouse. Eating fast food five times a week is costly and unhealthy. Even if your spouse replaces one fast food lunch a week, the savings will be about R200 a month. That’s R2600 for the entire year.

6. Save Money at Restaurants

Eating at restaurants was such a treat for us as children. That’s because we didn’t have to pay the check.To save money when dining out, eat at a family-friendly restaurant offering free meals for children.

Prices on the kid’s menu are cheap but if you were eating at a restaurant that offers a free meal for children with the purchase of an adult’s entree. Order water to drink instead of sodas or limit your drinks to one round instead of 2 or 3. Another great way to reduce costs on eating out is checking deals sites like hyperli or daddy’s deals for promotions not only for kids but families too.

7. Use a Consignment Shop

Many parents sell their children’s clothes, books and toys through consignment shops. Most items are in such good shape, you can’t tell another child ever used them.

These days you can also do your selling online with sites like gumtree and OLX you can post ads and have the customers come to you. Negotiate your price and even get a better deal for clearing out the clutter from your house. The money you earn from your own sales can fund your child’s next wardrobe.

8. Cut Bills and Banking Costs

Lowering your bills is easier than you think and can save you money on everything from the cable bill to the phone bill. Eliminate unnecessary bank costs. ATM fees, monthly checking account fees and high-priced check reorder eat into a paycheck when they can be avoided. Save money on stamps and late fees as well. Pay your bills online or set up a bank draft so your bills are paid automatically.

9. Investigate Cell Phone Plans

Those ads for plans that include free calls to everyone on the same network sound like a good deal, but they usually come with expensive monthly bills and long-term contracts.

Choose a pay as you go cell phone plan to save hundreds of rands a year and keep you from being locked into a contract. Many prepaid plans offer the same features as those pricey plans, including rollover minutes, call waiting, voicemail and caller ID.

10. Save On Tax

Ensure a bigger return from SARS and look forward to tax season. For those of us raising families, we could use that cash throughout the year. Take out a retirement annuity as well as looking into the use of a tax-free savings account to reduce your tax burdens and also ensure you fill your correct claims.

Every little bit counts

Saving is a habit and needs to start small to get the idea ingrained in your everyday life and get traction going. Once you’ve started cutting down and putting away savings, you will not only find it hugely rewarding and comforting but motivated to beat previous savings and find even better ways to save.

If you think we missed any great savings tips, feel free to share it with us in the comments section below

Like most indebted South Africans, you have to manage multiple accounts, credit cards and unexpected bills. You probably wonder how to pay it off quicker. Should you make minimum payments on all debts? What about saving money on accumulated interest? Can debt consolidation be your answer to eliminate debt?

Avoid paying only the minimum instalments

When you have only one debt to worry about, it’s easy to plan repayments. You only have to commit to one monthly instalment and interest rate. The more you pay back monthly to creditors, the faster you eliminate all debt principal and accrued interest.

Making only the minimum payments will take longer to pay off the balances, possibly months or even years, while accruing more interest than the initial debt principal.

It makes perfect sense to repay the maximum monthly fee you can realistically afford in your budget towards the debt, therefore avoiding paying the minimum instalment on your debt. You want to get rid of this debt as fast as possible.

When you juggle multiple debts, various high-interest loans, credit cards and retail accounts, you need to develop a different debt repayment plan that works in your favour. Your priority should be to minimise those growing interest payments. Therefore, making only minimum payments on each account is counter-intuitive.

Get rid of debt faster

You can eliminate debt faster by adding extra to your monthly instalments. To simplify, the two most popular strategies are the debt avalanche and the debt snowball methods.

The debt avalanche method is ideal for eliminating multiple unsecured debts like credit cards, where it is essential to reduce the amount of payable interest.

• Make the minimum payments required on all accounts.
• Add as much as you can towards the account with the highest interest rate until you finish this debt
• Repeat the process with the next high-interest debt until all debts are paid

In short, you will pay off all debt from the highest interest rate to the lowest one, reducing the accrued interest, and getting out of debt quicker, although it may take a while to gain momentum and see results.

The debt snowball method is recommended to cut off multiple debt regardless of the interest rate, from the smallest debt to the largest amount. It is beneficial when you’re struggling with too many debt accounts.

• Make the minimum payment required on all accounts.
• Add extra money, as much as you can budget, towards the smallest debt until you eliminate it
• Repeat the process with the next smallest debt until all debts are paid

By eliminating multiple smaller accounts with outstanding balances first, you get the added advantage of improving your credit score faster. However, unlike the debt avalanche method, you’ll end up paying more in interest over time if you are only going to eliminate those higher-interest accounts later.

The above debt repayment plans work well, among other possible strategies, assuming you make payments on time and manage your monthly spending accordingly.

If the debt becomes overwhelming or you are in danger of defaulting on payments, it is best to consider another option to ensure timely repayments you can afford at a lower interest rate: debt consolidation.

Debt consolidation and interest rates

For many indebted consumers, debt consolidation is the ticket to making various debt repayments manageable, even when you can no longer afford the minimum instalments.

If you struggle with debt, it’s best to consolidate debt under debt review instead of taking another consolidation loan that you barely handle.

Combining multiple debt accounts into one larger debt with a single interest rate simplifies debt management. But it also improves your monthly finances by renegotiating new affordable payment terms, including a preferential interest rate, which reduces the total interest paid over the initial period.

This is because interest rates for debt consolidation under debt review are considerably lower to almost zero. Debt consolidation interest rates are renegotiated as lowest as possible to cut down interest so that you can focus mainly on paying off the principal debt, without the burden of uncontrollable accrued interest.

Again, making only minimum payments on the new debt consolidation plan will take longer to repay this single debt, but it may be the only option you have available, depending on your income and credit affordability.

The debt counsellor in charge of the debt consolidation process will work within your budget constraints to set the most advantageous monthly payment schedule and find ways of paying the debt faster whenever possible.

Our professional DC Debt Clear Debt Counsellor will help you stay on track with your debt repayments through a quick and affordable debt assessment process, if you are in need of greater help he will introduce you to the Debt Review Process. All of our debt counsellors are registered with the National Credit Regulator (NCR). Visit our page at www.dcdebtclear.co.za for more assistance.

Not all debts are created equal in South Africa. It depends on the type of loan one is taking and the choice of interest rate: fixed or variable/flexible. Before incurring more debt, pay attention to payback terms and interest rates, as it can make all the difference in your budget and debt repayment plan.

Most types of loans in South Africa provide both fixed interest rates and flexible rates linked to the country’s repo rate. This rate is determined by the South African Reserve Bank (SARB) and is currently still at a record low of 3.5% to stimulate the economy impacted by the ongoing pandemic threat.

Variable interest rates and debt

With a flexible interest rate, you can expect your monthly repayments to fluctuate from time to time.  Any sharp increase in the base rate will lead to higher accrued interest and more debt repayment over time, which may prove problematic for some borrowers, particularly when faced with tighter budgets.

However, any substantial decrease in the interest rate, as with the decreed low repo rate following the financial downturn, will lower the monthly debt instalments. To keep the lower monthly repayments, borrowers may consider fixing their current loans, such as mortgage loans or vehicle finance, by switching from a variable to a fixed interest rate.

Depending on the total duration of your loan and the moment of changing interest rates, this move may prove either advantageous or detrimental to your debt repayment schedule.

According to economist Dawie Roodt, fixing interest rates is usually done for a limited period of up to three years, where the fixed rate remains unchanged for the loan duration.

However, the new fixed rate is typically 1,5% to 3% higher than the initial flexible rate you are paying, which can prove counterproductive in certain circumstances. Read more here: https://businesstech.co.za/news/finance/406401/the-big-rates-quandary-south-africans-now-face-fix-or-dont-fix-dawie-roodt/

Generally, it’s wise to move from a variable rate to a fixed interest loan when:

• there is a significant expected increase in the variable interest rate, which leads to costlier monthly instalments. Choosing the fixed rate option at the opportune time may decrease these repayments.
• your budget is tighter than it used to be, and you may benefit from a short-term fixed interest rate change, even if this is slightly higher than what you are paying now.

Fixed interest rate loans

Fixing the interest rate on loans protects the borrower from fluctuating interest during the loan’s lifetime. Therefore, fixed interest rates ensure that monthly repayments stay the same while paying off the loan.

Loans provided at fixed rate interest range from low-interest home loans and vehicle finance to high-interest credit. A common type of unsecured debt suited for quick short-term expenses, personal loans typically have a fixed rate for the entire loan duration between one to five years, usually lower than credit card interest.

Since added interest is already higher on unsecured loans and credit card debt, it may be a good idea to make these monthly repayments more predictable at a fixed interest rate, the lower, the better.

Fixed-rate loans are a better choice than flexible loans if you work within a low or constrained budget, prefer a predictable repayment amount every month, or cannot afford any increases in interest or debt repayments.

Debt consolidation interest rates

Fixed repayments make it a safer, more predictable option for borrowers, ideal if you’re already juggling multiple unsecured debts or run into deep debt trouble. When you take a loan with fixed interest, you know exactly how much you repay monthly and how long you have until you pay off each loan.

For this reason, interest rates for debt consolidation, which combines multiple debts into a single one, are negotiated at a fixed rate throughout the debt repayment schedule. A good debt consolidation interest rate is significantly lower than the interest rates taken on the initial loan, which is vital to decrease monthly repayments and avoid defaulting.

Under debt counselling, it becomes easier to manage only one monthly instalment and its accrued interest instead of varying payments and interest levels. If you’re over-indebted and on a tight budget, you can also opt to spread out the loan, making even smaller payments over a longer time, although it will cost you more to finish it off.

Our professional DC Debt Clear Debt Counsellor will help you stay on track with your debt repayments through a quick and affordable debt assessment process, if you are in need of greater help he will introduce you to the Debt Review Process. All of our debt counsellors are registered with the National Credit Regulator (NCR). Visit our page at www.dcdebtclear.co.za for more assistance.