Financial Freedom

Financial freedom… everybody wants it, but few achieve it. Why is that the case? The answer can usually be summed up in one word, DEBT. Debt is the killer of financial freedom for so many South Africans. Getting out of debt may seem like an impossible task. Trust me, I know all about it. When my career started taking off, banks and other accredited financial service providers were only too happy to provide me with as much credit as I could spend. This all happened before the National Credit Act became law in South Africa. The new Act forced companies to acquire full credit profiles of all prospective debtors before granting any loans. The act is regulated by the National Credit Regulator. If you are already under too much debt to manage without seriously impacting your ability to get through the month, you can always seek debt counseling.

When you realise you are over indebted, you can also follow a few simple steps to get out of your financial woes without the aid of a debt counselor. The first thing is that you need to acknowledge and accept the fact that you are in trouble. This can often be the hardest part. Go through all your old bank statements and get a family member to help so that you don’t miss anything. Add all your monthly payments together (payments to creditors only) and determine how much you have left. Remember, you need to include rent, car payments, insurance, average cell-phone costs and all your other monthly installments. Once you have completed this, you have a very rough idea of what you have to spend for the rest of the month. Now you need to determine how much you spend on fuel, groceries and other expenses. Then you will have the final amount which is generally considered as disposable income.

If you are lucky, you actually have disposable income left after adding all these things together. If not, you need to check how large your deficit is. Sometimes it will be a viable option to consider a second, part time job. Finding a waiter or bar tending job isn’t too hard in South Africa, but you need to consider the impact it will have on your regular job. You can’t afford to lose your stable income because you are tired due to you working until 2am in a restaurant.

If possible, consolidate as much of your debt into a lower interest loan. Cut up your credit cards and all your clothing account cards. For me, this was a huge leap. Like a lot of over-indebted people, I paid credit cards with other credit cards. This vicious cycle almost destroyed me financially. Cutting up all my cards and throwing them into the fire was almost like a cleansing ritual for me as I was so dependant on my credit.