4 Ways to avoid unnecessary debts

Money is one of the known factors that courses divorce amongst young and old couples. We may not necessarily admit to having financial problems until we are buried with debts that seem impossible to settle.

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Being financially survey is the greatest gift you can give yourself and your spouse because with today’s economy, every cent needs to be accounted for because it is true, money doesn’t grow on trees.

We cannot hide from the beautiful things that stand on various shop windows or displays but what everybody needs to do is to stay disciplined. You don’t have to live like you are in desert; life is to be enjoyed but with caution. It is not expected of you to deprive yourself of things that you feel will make your life easier even though they may not be seen by the society as a need.

Debt-Settlement

  1. Budget

I know we have had this word a lot of time that we have grown immune to it. But what is budget really? It is a plan for all your expenses. Your budget should be specific, realistic and time bound; this won’t be fulfilled without transparency and honesty. A notebook and a pen should be your friend; note down EVERYTHING that you need and want that requires money –this means from house mortgage to airtime. After all that is done you note down EVERY income you get, it doesn’t matter if it’s R100, note it down.

Now with all the figures at disposal you try follow this ratio -34% to your house, 15% to debts, 10% savings, 8% food and 33% to everything else. A lot of people spend more than 34% in housing but is not advisable to have 50% of your salary in a house because at some point you will not cope and lose everything in a process. If you follow this ratio and use before experiencing financial problems then you will have a stress free life.

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  1. Good credit and bad credit

There are things that we would like to buy but find we don’t have the financial capacity to do so and then enter into credit. With this you need to have discipline and know what is worthy to stress over and not. Good credit can be identified as study loans, car and home loans; you can enter into these financial commitments because we don’t have hundreds of thousands lying around. You don’t need to be paying monthly instalments for food, clothes and cell phones; these are unreasonable debts to have. 

  1. Get read of small things that costs money

There are ghost expenses that we don’t pay much attention to because they cost us a mere R50. But that R50 can go a long way. Prepare a lunchbox for work as oppose to eating out every time; this will not only cut on cost but also on unhealthy habits of eating fast foods. Cut on subscriptions on magazines and other things that are not needed like the gym membership you hardly go to.

Get quotation for car and other insurances so you don’t take the first one that comes up which may be expensive. Interests on credit card –try reducing the number of credit cards you have and pay in time to avoid errors or completely do away with them. Food brands can have unnecessary extra R3, so if you can, try out other cheaper brands and if the taste is not different, change.

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  1. Be honest to yourself about your affordability

All the above cannot be done with success if you are not honest to yourself about what you need and what you can live without. A lot of money is wasted on entertainment, trying to “keep up” with friends. If you know you can’t afford a trip to Paris then don’t go, don’t even think of borrowing money for it either. Accept your financial status and what you can and can’t afford. You will lead a life with not stress of avoid calls and tearing of orders if you learn to say no to yourself. Make a conscious choice, you owe yourself that.

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