As children, we were scared of monsters under our beds and the boogie man in the shadows, we were not scared of debt. As adults, our fears change to fears of money problems and debt, big decisions, love or loneliness, losing people and ageing.
Halloween is the perfect time to practice banishing frightful debt.
Don’t Be Scared of Debt Here Are Our Halloween Debt Strategies
- Check your credit report
Fewer than 5% of South African consumers make use of the legislation which entitles them to obtain their credit report free of charge from every credit bureau every year. A regular examination of one’s credit report could also provide timely warning to consumers that they might have been the victim of identity theft with the identity thieves running up enormous debt in their name.
- Emergencies can cause your bank account to suffer
When you find yourself in a position where you need to pay for something unexpected like a burst water geyser or a doctor’s bill, it’s easy to turn to personal loans and credit cards. But such solutions only create a cycle of debt-dependency – not to mention limit your credit. An emergency fund, on the other hand, can earn you interest until you need it. I know you are thinking; who can afford to put money into an emergency savings account but even R50 per month can result in savings that could lessen the blow in a financial crisis.
- Review your insurance policies
Insurance policies are living documents, which means they can be changed to accommodate changes in your lifestyle or circumstances. Many consumers don’t understand what coverage they have and could be spending more than they need. Reviewing your insurance premiums should be done annually, just like getting a physical or going to the dentist. Taking the time to shop around for better rates could result in substantial savings. Looking for an insurance solution especially for people in debt counselling?
Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt. Check out our debt calculator here.
- Plan for your retirement
It is never too early to start planning for your retirement, in fact the earlier you start the better. You should aim to put aside as much money as possible for when you retire. If your company offers a retirement annuity or pension plan, you should opt into this as soon as possible. You can also invest in your own retirement annuity and/or investments that will help you save money for the long term, allowing you to be financially secure when you retire
With a bit of preparation and planning, scary financial mishaps can be avoided and easily handled. Face your financial fears head on this Halloween and be prepared for any unexpected financial shocks and surprises.
With Halloween just around the corner, you may be busy putting together the final touches on your costume. Are you going as something sweet, like a cat or mermaid? Or did you decide to do something scary, like going as a vampire or witch?
As it turns out, financial decisions can also be looked at as scary versus sweet. Impulse spending — that can be scary, even though it might make you happy in the moment. Making decisions that pay off in the long run — pretty sweet. In the spirit of the season, let’s look at these decisions in terms of “tricks” and “treats”.
Here are some of the financial tricks we play on ourselves and the treats we get for making smart financial decisions:
Trick: “I’ll pay it off with my next paycheque.” It’s easy to convince ourselves it’s OK to buy something we can’t afford because we can pay it off soon. Not only is this a trick, but it can also be a trap because it gives you the possibility of racking up debt and getting stuck in a situation where you can only afford to make the minimum payments.
Treat: When you take the time to save up for something, the delay not only gives you time to decide if you truly want or need it but waiting to buy until you have the money to pay for it gives you a longer-lasting sense of gratification than the short-term satisfaction of buying on impulse.
Trick: “I’ll save later.” Putting off saving means putting off reaching your goals. With every paycheque you earn, you have an opportunity to take some of that money and set it aside, right off the top. The longer you wait to save for a goal, the more money you need to set aside, and the harder that is.
Treat: Having an emergency fund, travel fund, down payment, retirement, or any other type of savings can help reduce stress and give you the freedom to tackle all your financial goals. By automating your savings today, you can do what you want later.
Trick: “I’ll never be debt free so why not buy what I want?” This was my money mindset for years. I assumed that having debt was normal and, as long as I could always make the minimum payment, I could do/buy whatever I wanted. But every R1 of debt we have steals R1 (+ interest) from our future, and the feeling of owing money adds so much unnecessary stress to our lives.
Treat: It’s possible to live life without debt. If you have debt now, it will take some time and effort to pay it off. But once you hit debt zero, every $1 you earn is yours to keep — or spend on anything that will add value to your life.
Trick: “I deserve it.” Perhaps the most dangerous financial trick we can play on ourselves is the story that we “deserve” to buy whatever we want — even if we can’t afford it.
Treat: If you can afford to buy something with cash (or credit, paid off in full on time), buy it — but do so because you can afford to, not because you deserve it. We all work hard for our money. What we deserve is to buy what’s within our budget, so we can live a good life within our means and with less financial stress.
Boo! Have I scared away all the financial tricks yet?
If you would like some help with scary debt contact us now…