Tips on how to stay debt free this coming festive season

With the festive season and Black Friday coming, people are resorting to debt to help fund their lifestyles.

Credit is a good thing when used correctly but the statistics have proven otherwise. South Africans continuously fall into reckless credit, burdening themselves with debt they can’t afford to pay back.

This is a recurring trend where individuals end up borrowing money from financial institutions and loan sharks just to put up with a certain lifestyle during the festive season while putting their lives in potential financial jeopardy.

The Credit Ombudsman of South Africa says though the credit provider is supposed to assess whether or not an individual can afford the credit, it is also on the onus of the lender to know their limitations when applying for credit.

It is always tempting to apply for credit to extend your financial limitations during the festive season, but be sure that you can afford to pay it back. Being flagged as a bad payer not only affects your credit score but also your chances of paying lower interest rates and qualifying for debt when you really need it.

Head of Sanlam business development for retail credit, Ayanda Ndimande, says: “Credit might seem like a nice ‘pay now and worry later’ nice option – but it can come back and bite you.

“You should be aware that interest rates are high, and fees will be added. What you think you are paying is not the true price of the item in the long run.

“For example, dipping into your store account for R3 000 worth of holiday outfits and paying this off over 12 months could cost as much as 39% more! It’s always the better option to try to spend within your means.”

There are institutions available to assist you if you feel you are over-indebted or are falling into the trap of accumulating too much debt. Until then, educate yourself and practice responsible credit.

There are ways to save you financial trouble this coming festive season.

The Consumer Protection Office gives us the following tips:
>Always plan before you spend and work out what you can afford before you spend – draw up a budget.

>Always have a festive budget – putting down your income versus daily living expenses and debt. This will help you to be realistic about what you can spend on gifts, travel, accommodation, and other entertainment over this period.

>Always pay your creditors (store accounts, insurances and medical scheme) on time during the festive season.

>Always shop around for the best deals and prices before you make a purchase.

>Always be careful about the “buy now and pay later” deals.

>As you spend over the festive season, always remember that some bills such as electricity, water and telephones do not go on holiday over the festive season and will need to be paid in the New Year.

>Avoid wasting money on inferior quality products because you will spend more money on repairs.

>Always shop with January in mind.