ACCREDITED DEBTCOUNSELING SERVICES

HOW TO GET OUT OF DEBT - FOR GOOD!

Living with Debt? Never fear, here’s our easy-peasy guide to help you get out of the red and start saving. So read this NOW, before you find yourself closing your eyes and hoping for the best as the cashier swipes your credit card for that purchase you convinced yourself you absolutely had to have.

Fun Fact: According to the FinScope SA 2013 Consumer Survey, 14.2 million South Africans have some form of credit or loan. Of this, an alarming 4.7 million are over-indebted. What’s worse is that most of us who are in Debt owe money to multiple creditors. As Debt becomes easier to get as a young, first-time salary earner. If you’ve foundyourself sliding into bad Debt or are already caught in the Debt trap… BREATHE. Accredited Debt Counseling Services (ADCS) is here to help!

GET OUT OF DEBT – FOR GOOD!

Understanding Interest Rates

A lot of people don’t understand the power ofcompound interest. Interest on Debt has a negative impact on your money as you pay double or triple the amount you actually owe.

Confused? Say you’ve been eyeing a gorgeous handbag and you finally buy it – by swiping R5 000 on your credit card. If you pay it off over a couple of months, including interest, you’ll have spent up to R15 000. Makes you think, doesn’t it?

Stuck In A Financial Rut

If you regularly spend more than you earn, get calls on a regular basis from Debtcollectors, have high stress levels, feel depressed and have started ignoring your monthly bills, then you’re probably trapped by your Debt.

Denial is a powerful thing. It can give you the illusion that you can keep on spending, incurring more Debt, in the belief that one day in the distant future you will finally decide to start paying it off. But not before you get the latest smartphone on the market, right?

There’s such thing as good debt

The idea of debt seems like a catch 22. To get a good credit rating, one needs to get credit. That’s why, there is such a thing as good debt.

Buying a home is usually considered a good investment; it’s an asset that will outweigh the upfront cost over the years. It is also advisable to pay off your own investment instead of renting, where you are paying off someone else’s investment.

Many graduates opt for a clothing account to try and get their credit record going. While this may seem like a good ideainitially, as you have the option of paying back your debt over six months interest free, many get sucked into maxing out the account and having to pay back exorbitant monthly instalments.

You’re A Target

Unfortunately young people are easier targets, because creditors make it easy to get a credit card or clothing account for youngprofessionals, but some of them don’t know how to manage their money.

The biggest problem is that the younger generation assumes that just being given credit assists their credit rating, but this is not so. If you don’t manage that credit correctly, itdamages your rating. No credit rating is better than a bad credit rating.

Bad Debt

Most South Africans who have loans and credit are contributing more than 70percent of their salaries to their monthly debit orders, leaving them with little to survive on for the rest of the month. Cue the credit card that was meant foremergencies but is instead being used as a means of survival.

ADCS cautions that the worst thing you can do as a consumer is to not pay back your credit at all.

This will put your credit rating at risk. Once you have a bad record, it’s quitedifficult to clear. This can make it harder, or even impossible, for you to borrow money in the future for things that are important, such as buying a house.

You also run the risk of losing yourproperty, or any other assets you may have, to pay off your bad Debts.

Your step-by-step guide to getting out of Debt

• Don’t wait till you’re drowning in debt to get aDebt Advisor. A Debt advisor will guide you through your financial journey, advising you on how to spend your hard-earned cash.

• Make the decision to stop borrowing money.

• List all your debts, from the lowest to the highest balance, and pay off debts with the lowestbalances first. Baby steps…

• After paying off the first debt, use that amount to pay off the second debt by increasing your debit order amount by the first debt instalment.

• If you get excess cash, put that money towards your debt payoff plan.

• Consolidate your debt and work out a repayment plan and stick to it.

• Keep in mind that debts with higher interest rates are dangerous things to leave unpaid… Remember thecompound interest thing?

Face The Facts

The first step to getting out of the Debt trap is identifying that you’re in it. Start by being aware of your financial situation, prioritise your Debt repayments, and arrange with your creditors to reduce the payments where possible.

Don’t be afraid to sell the stuff you don’t need to make extra cash, and get help if you need it. This is where a DebtAdvisor can also be helpful – sometimes we just need someone to remind us to think before we swipe. When thishappens ADCS will help you.

So, if you want to pay off your credit card Debt, what’s the best way to go about it?

Accredited Debt Counselling Services shares these 5 best tips.

There are some advantages to having a credit card as it can be aconvenient way of buying goods without using cash. It also gives you access to an interest-free loan if you can pay off the balance before the end of the month. However, if you’re unable to pay off your credit card balance each month, credit card Debt can increase at a rapid pace.

According to Debt Counsellors at Accredited Debt Counseling Servic-es, credit card Debt is one of the most expensive forms of Debt. This is because interest rates are generally higher on credit card Debt than other Debt forms. Therefore, consumers need to be extremely aware and guarded of how credit cards are utilised as this, if not controlled, can lead to serious financial implications.

Stop using your cards

The first step in paying off credit card Debt is to completely stop using the credit card. The best way to stop using your credit card is to take a pair of scissors, cut the credit card in half and then throw it away. A credit card that is still usable WILL get used and all the payments made to reduce the balance can be nullified inseconds.

At the same time, cut back on luxuries and only spend money on essentials. When you do pay for them, use cash or your debit card – this will ensure that whatever you buy is within your means. Remember, you can always re-apply for a credit card in the future, thus destroying the card that is out of control should be seen as a stepping stone. If you do not wish to destroy your credit card, consider putting it away where you will have to go to some effort to get it back. Put it in a safe or ask a trusted family member to keep it for you until the balance has been paid off.

5 Ways To Pay Off Credit Card Debt

Pay the minimum amount you currently owe every month

As you pay the minimum amount you owe each month, not only will your overallbalance be reduced, but your minimum repayment will as well. However, if you keep paying a fixed amount per month instead of paying the newly reduced minimum amount, you’ll get rid of your credit card Debt more quickly. If step one is followed and you stopped using the credit card, the balance will be reduced much quicker and you will have rid yourself of credit card debt in no time. Even if you only pay theminimum installment, the balance will reduce with every payment. If one keeps using the card, the balance will never decrease.

Overpay your minimum repayment

If you find that you have extra cash in a month, resist the urge to spend it and rather put it towards reducing your credit card balance. Doing this will minimise your Debt faster and will save you extra money you are paying towards credit card interest. Remember that in South Africa every payment on a Debt is first put toward serving the interest and fees, and then applied to the remaining capital. With this in mind, paying a little extra each month will ensure that more funds are applied to the outstanding capital, reducing your balance faster.

Use other savings to repay credit card Debt

With the exception of retirement annuities, consider withdrawing money from an extra savings account to help clear or at least reduce your outstanding credit card Debt. Although you won’t have those savings at your disposal after you’ve withdrawn the money, you also won’t be paying extremely high interest on a credit card balance, saving you money in the long run. It is important to note that you should not cut into your emergency savings buffer to repay credit card Debt, unless your savings buffer is large enough to support a down payment on the credit card and still be sufficiently large enough to serve you during an emergency situation.

Get help from a professional

If you �nd that you can’t a�ord your minimum monthly repayments, it can be hard to get out of Debt. Debt review can help you get a handle on your �nances so that you meet your �nancial commitments for all the Debt you owe. Depending on your situation, a Debt Counsellor may recommend a Debt management plan or may help you make alternative agreements with your bank, such as making smaller monthly minimum repayments.

Though credit cards serve as a quick and easy alternative to pay for things without using cash, however, if the use is not monitored properly they can cause many individuals �nancial stress. Luckily, this can be kept under control if the above steps are followed.

Contact us on:Tel: 021 945 3020Cell / Whatsapp: 081 556 5846Email: info@adcs.co.zaSkype: ADCS.debtcounselling

Office address:9 Helderberg StreetChrismar EstateBellville, 7530

At ADCS we assists individuals, who are facing a Debt challenge. We will gladly advise you based on your personalsituation and circumstance, in aprofessional and honest manner.

We assist our clients by educating them about the Debt management options that will remedy their personal situation, in a sympathetic manner. Our aim is to ease the financial burden and eventually achieve financial freedom.