Are you one of the lucky South African consumers expecting to receive a 13th cheque or tax refund soon? It can bring some financial relief (if used prudently) especially as December is one of the most, if not THE most, expensive month of the year. Have you done some financial planning to sensibly make your ‘little bit extra’ work for you and your finances?
Matthys Potgieter, spokesperson and debt expert at DebtSafe, says consumers that are struggling to keep up with their debt repayments are increasing by the minute. “And, as a result of this, you can witness people having impaired credit records as well as major financial (in some cases legal) problems,” adds Potgieter.
Potgieter suggests that you should consider making wise choices when you receive your ‘little bit extra’ this year. He highlights that you can either be a spender, saver or user, which one would you rather be?
The risky spender
It’s is always fun to do a bit of splurging but, as you know, life is expensive and economic times are currently tough for South Africans. DebtSafe, therefore, recommends that you only spend a little this December (if you can really afford it). Rather spend a few bucks on that holiday that you need to pay off, instead of being a risky spender by spending all your bonus money on unnecessary, expensive items.
The cautious saver
If you are in a position to save your entire bonus or have money left from your tax refund amount (after your necessary debt payments etc.), why don’t you save it? Tuck your entire bonus or a part of your tax return into your rainy day / emergency fund. Life happens and you never know how much your ‘little bit extra’ savings may come in handy, especially when you really need it.
The wise user
Potgieter recommends that a bonus or tax refund can be put to productive use by paying off excessive debt. So if you relate to this, there is one of two things that you can do:
1. you can either make use of the so-called snowball effect by paying off your smallest debt first (like a clothing account); or
2. you can use the avalanche method – where you add the money to help pay off your debt with the highest interest rate first, like your credit card.
Don’t be a fan of no-plan when it comes to your bonus or tax refund this year. Remember January is also around the corner and can be a very long month if you do not consider using your ‘little bit extra’ wisely. DebtSafe offers a debt management programme for over-indebted consumers. Get in contact with the team and send a free SMS: Your name and INFO to 30898.