South Africa’s ongoing challenging economic conditions have increased the need for consumers to borrow money to cover day-to-day living expenses such as groceries and fuel, even though borrowing money in this manner is not sustainable and will inevitably result in financial difficulty.
As pressure to spend mounts, more and more people are going into debt to sustain an unrealistic lifestyle.
Sadly, the abuse of credit cards is often a precursor to future financial difficulties.
If you fail to make your credit card payments on time, your bank can report you to the credit bureaus, which in turn can negatively impact your credit score.
A poor credit score can affect your ability to secure a home loan should you wish to purchase a property in the future and may hamper your efforts to move forward in life.
To ensure that you are using your credit card responsibly and optimising the benefits of such a facility consider the following:
If you find yourself drowning in credit card debt, the first step in the process is to free up some monthly income to start paying back your debt.
This will involve making short-term sacrifices for a longer-term gain.
It may require that you cancel your DStv, Netflix or Apple Music subscriptions for some time so that you can redirect the money towards settling your debt. Bear in mind that, while you are servicing high interest, unsecured debt, it is almost impossible to start saving, build an emergency fund and invest for the long term.
The second step is to find a debt-reduction calculator that works for you, with there being plenty available online which allow you to employ various debt-reduction strategies.
Getting out of debt takes hard work, sacrifice and self-discipline, but it can be done and it begins with taking the first step.
Eric Jordaan is a director at Crue Invest
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