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The tough love YOU need to fix your finances

3 January 2024
5 minute read
Woman on couch with laptop

If you struggled to balance your budget in 2023 and stay out of debt, then you may need some tough love! Tough love money tactics are challenging, so you'll need lots of courage and commitment. But, you need to make big changes to make big wins!

Tough love tactic #1: Enter debt counselling

What is it: Also known as debt review, debt counselling is a legal process where your short-term debts, such as credit cards, store cards and personal loans, are paid off with one monthly, affordable repayment amount.  A registered debt counsellor will assess your debts, and, taking your budget into account, come up with a repayment plan that you can afford, ensuring you can still pay your living expenses.

Consider it if: Your debts are overwhelming you, you miss repayments, and/or you use one debt to pay another.

The tough love: Although you have enough to pay living expenses you don’t have money for luxuries or nice to haves and you cannot use short-term credit or take on any new credit. Plus, you often take a bit longer to pay off your debts because the repayment amounts are usually reduced to make them more affordable. Debt counselling can take a few years to complete.

Why it works: You pay off your debts! And, because you have to commit to a budget you will learn to manage your finances and live within your means.

Take note: You will need a regular income so you can stick to the repayment plan. And, you need to take action quickly because once a creditor has issued a judgement you may not be eligible for debt counselling.

Read more: How debt review changed my life and 7 things you need to know about debt counselling.

Tough love tactic #2 Downsize big expenses such as your home and car

What is it: Reduce your housing and/or transport expenses. You can cut your housing expenses by moving in with family or friends, or buying or renting a smaller more affordable property. You can reduce your transport expenses by selling a car and using public transport or downsizing to one car for the family and/or a more affordable car with much lower repayments.

Consider it if: You have made small savings such as cutting down on entertainment costs, but are still struggling to pay all your bills each month. When you need to save thousands you need to cut the big expenses such as car and home loan repayments.

The tough love:  These are big steps! For example, moving home itself is a stressful event, moving to somewhere smaller where you probably have to share rooms, maybe living spaces with family, can be a big adjustment. And, if you move to a no car situation, you will have to get used to public transport and increased travel time.

Why it works: It can save you thousands. What if you can save R5 000 on housing and/or transport costs? How would that help your budget!

Take note: You will need some patience. It takes a few weeks, sometimes months, to move houses, and/or sell. And, it will take a few months to get used to new living arrangements and new transport arrangements.

Tough love tactic #3: Say no when family and friends ask for a loan

What is it: Learning how to say no politely but firmly when friends and family ask for money.

Consider it if: Your budget does not balance because too much of your income is spent on loans to family and friends.

The tough love: You are saying no to family and friends, people you respect, admire and love, and who are going through a tough time. Plus, there is a lot of social pressure to say yes, and help where you can. Saying no is hard.

Why it works: It will dramatically improve your chances of sticking to your budget and perhaps keep you out of debt!

Take note: Family tensions may arise. Okay - probably will arise! Explain why you are saying no, be firm and don’t give in to requests and the tensions will fade.

Read more: How to say NO when friends and family ask for loans

Learn more: Sign up for the 30-minute Cash Crunch course from Truth About Money and you’ll learn how to cut big expenses like housing and transport from your budget. Includes a downloadable budget spreadsheet and inspirational real-life stories!

Tough love tactic #4: Say no to keeping up with the Khumalos

What is it: Living within your means and not spending on big brand names, cars and clothes!  Buy the basics from food to clothes, cars, furniture, appliances and cell phones! And don't spend what you don't have on social events and appearances.

Consider it if: You are buying big-ticket items on credit – and often spending more than you need to on brands you can’t afford.

The tough love: We are all under pressure to drive the best cars and take the most exciting holidays. Resisting social pressure is tough but focus on what is important for you and your family and not on what other people think about you.

Why it works: You get to focus on using your money to build wealth for yourself and your family and not on keeping up with the Khumalos! You will soon start reaping the rewards of a growing bank balance!

Take note: Be open with your family and friends about what you can and cannot afford, you may find many in the same position who admire your stance!

Tough love tactic #5: Double savings and investment contributions

What is it: Increasing, by large amounts, how much you save and invest every month. See if you can double some of these amounts, including any pension fund savings at work for which you should get a tax deduction.

Consider it if:  Your savings take a back seat in favour of a few luxuries today, and if you worry about how you will afford things in the future, including that new car, and your retirement.

The tough love: It will take money away from other expenses. You will have less to spend and have to be a tough disciplinarian when it comes to the budget!

Why it works: Over time, you will grow your wealth. More savings in the future also means less financial stress. You could have, at the end of 2024, that emergency fund of 3 to 6 months expenses. Or, enough for a deposit on a new car or home.

Take note: The rewards are long term, so the year will be tough. But, you can get used to doing without the amounts you are saving quite quickly, and in a few years you will be on the road to true financial independence and freedom.

Do something big in 2024

Be bold and brave with your budget this year! These tough love tactics can help you achieve your financial goals. Give them a try and become the master money manager of 2024!

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