3 May 2023
As a worker, borrowing is ordinary and necessary for most individuals, but taking on too much debt is costly and stressful. Debt can negatively impact your life. Looking at the current cost of living, it is understandable that workers take loans, some store and credit cards here and there.
Unfortunately, one thing about debt is that interest rates may pile up, sinking your financial and mental health. It’s easy to get in and very hard to get out of debt. If you are worried about your debt, you can take control – the most essential thing is getting started immediately. In this blog, UASA looks at a few steps to help those facing debt challenges manage and reduce their debt correctly.
Add up your debts and prioritize
Jot down all your debts. Divide the debts into top priority, going down to non-priority. The first thing is to downsize your debt by shifting it onto a cheaper deal, and the second is to find extra money by budgeting and saving.
Starting by paying off small debts like store cards, cell phone contracts, and others can be a good start for you. Being able to be consistent and paying off small debts will help you focus on more significant debts as time goes on because you will be in a better position as your financial status improves.
Shop for better rates.
It would be worthwhile to contact your present card provider(s) to enquire whether any of your current cards have lower interest rate possibilities. You might also request an increase in the credit limit on your cards with the lowest interest rates. Then you can transfer your higher-cost debt to cards with lower interest rates.
If you have a bond or home loan, it might be beneficial to compare your terms to what is currently available on the market. You can switch lenders, and even a 1% difference in interest might save you a few thousands over the course of a year, provided that you are not trapped into a fixed or discount rate agreement with early repayment fees.
Another option for you to consider is a debt consolidation loan. This loan allows you to move all your debt (personal loans, credit cards, and store cards) into one place. This means you will have one big loan to cover the amount of your current debt rather than having several little ones. You will only have to make one monthly repayment; in theory, your debt might feel easier to manage.
If you are struggling to make any payments, there are several options to consider, although these should be taken with seeking advice first. Some professional assistance that one may seek includes debt counselling or a debt management plan where you can speak to a professional to advise you on managing your debt and finances better.
As a UASA member, you qualify to contact Debt Rescue Company an accredited institution through UASA Financial Services (UFS) and get professional assistance. The partnership between UFS and Debt Rescue assists UASA members who might be in need of accredited and professional financial help and assistance when they need it the most.
Remember that you are not alone and don’t have to deal with debt alone. Just talking about it with a financial advisor could make a massive difference in how you feel. Visit www.uasa.org.za to get in touch with Debt Rescue through UASA Financial Services.