Manage your debt responsibly

Manage your debt with life insurance

Posted  September 12, 2012

South Africans are a nation troubled by debt. According to the National Credit Regulator (NCR), as of September 2011, the total outstanding consumer credit balance was a staggering R1.27 million.

If you are one of the millions of South Africans in debt, learn how to manage your debt responsibly and know what to do if your debt ever becomes unmanageable. 

Here are some of our top debt-busting tips:

  1. Help you family cope with your debt in the event of your death by purchasing a life insurance policy
  2. Purchase disablement cover and dread disease cover so that you can continue to pay off your debt even if you are ever disabled or seriously ill and unable to work
  3. Build up an emergency savings fund to ensure that you can meet your monthly debt repayments even if you are having a tight month
  4. Before taking out a loan make sure you can afford the monthly repayments. Draw up a budget of all your monthly expenses, including short-term and retirement savings. Do you have enough money left over to comfortably meet the monthly repayments?
  5. Your debt repayments should never be more than 30% of your disposable income. Disposable income is what remains of your salary after taxes have been paid
  6. Try and pay more than your minimum monthly repayment amount. This is good for your credit record and you will save on interest in the long term
  7. Keep your credit rating clean and make your monthly repayments on time

If your debt ever becomes unmanageable, here is some advice from the NCR:

  1. Always act on a letter of demand. Contact your credit providers and explain your situation, they would rather receive some payment than none at all
  2. Seek help from a debt counsellor. If your credit providers are not willing to assist, approach a registered debt counsellor to help you manage and restructure your debts. To find a registered debt counsellor visit the NCR website 
  3. Never skip a payment – even when you are under debt counselling. You could risk losing your house or car!
  4. Prioritise your home loan. Never skip your mortgage payment even if you are under debt counselling
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