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Send  Share  RSS  Twitter  16 Nov 2009

FINANCE: Sage Advice from the National Credit Regulator

 





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During last year’s Christmas season, consumers were cautioned not to overspend – and a year later as the global recession has taken its toll in South Africa, the message is no different. “Consumers are generally worse off than they were a year ago – the economy is in a recession, inflation remains stubborn and the possibility of further job losses persists” says Peter Setou, Senior Manager: Education and Strategy at the National Credit Regulator (NCR).

A reckless Christmas spend will, in all likelihood cause untold financial stress into the new year and it is recommended that consumers need to keep an accurate tally on exactly what they will spend this season, and should plan in advance, rather than wait until its too late, start formulating a budget now.

Setou advises that a Christmas budget is crucial. “Putting down on paper the realities of income and daily living expenses will concentrate the mind on exactly what is available for gifts, travel and entertainment over this period. It is a reality check for many consumers in denial.” He also urges consumers to give great consideration as to how bonuses and thirteenth cheques will be spent. “The repayment of debt, even some savings, would be the preferred route, rather than unplanned spending.”

“Another good plan is to be proactive and to double-up on your regular payments such as mortgage or rent, lights and water. That way you would have given yourself some breathing space after the holiday season for New Year costs such as school fees and uniform”, added Setou.

Besides being extra vigilant over Christmas, Setou encourages consumers to regularly revisit their spending patterns. “Lifestyle changes should be made if required, rather than simply going further into debt to keep up the same standard of living. This could mean a downgrade in car or even sharing transport. Become more effective at comparing prices and effective shopping, ignore tempting product and credit advertisements, shut yourself off from those deceivingly expensive “no-deposit” offers, and be a disciplined borrower, saver and spender. There are many consumer bodies, media articles and websites that offer a host of money-saving tips to consumers. In all of this information and advice, there will always be something for a specific consumer to try.”

In an environment when job losses are still occurring, Setou urges those who have been retrenched to carefully manage their retrenchment packages.

While consumers have had some relief this year from a 5% cut in interest rates, Setou says these benefits should not simply be seen as opportunities to return to reckless spending habits. “Consumers should channel these savings into repaying debt or building up a small emergency fund.”

With some consumers having learnt some very wise spending tricks over the past year of recession, Setou advises that these are lessons well learned. “Put the brakes on overspending, think before you buy as debt costs more than you think, spend wisely this festive season and remember to save for the New Year, concluded Setou”.


 
 
 
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