Tips to help you adopt a penny-wise mindset

OFTEN consumers fail to plan for the New Year and this leads to them borrowing funds for essentials such as school uniform, registration fees, stationery, transport money, food etc.

Due to the high level of desperation, these consumers might borrow recklessly and from unregistered credit providers, said Mpho Ramapala, Education and Communication Manager at the National Credit Regulator (NCR).

Ramapala has advised consumers to only borrow from registered credit providers, plan how to repay the loans and most importantly determine whether they can afford the repayments.

Tips for borrowing wisely:

• Borrow as little money as possible. Borrowing to fund your children’s education or a home loan can be a good thing, but borrowing for consumables or to pay off other debt or to fund luxuries such as holidays or designer clothing can condemn you to a lifetime of debt.  Only borrow for what you really need.
• Avoid paying over too many months as it will cost you more in the end.
• Create a monthly budget and stick to it – work out how much income your family earns and what your total expenses are each month. Will you be able to pay for your new debt once you’ve covered all your expenses? You should also plan for unexpected costs such as if one of your family members is retrenched.
• Always include savings in your budget.
• Pay your debts on time. Paying late will adversely affect your credit report and possibly your ability to take out credit in the future. If you think you cannot meet your monthly installments, call your credit provider immediately and try to re-arrange payments. Do not wait until you skip payments.