Luke Hirst, registered debt counsellor and MD of Debtbusters says this is the first step that every household should take in a bid to curb any financial woes. "If you know how much you spend and where you spend it you are far less likely to fall behind on any payments that you may owe. If you make your budget yourself, make sure you prioritise correctly and, most importantly, stick to the budget you draw up."
2. Thou shall not drive an expensive donkey
"I can't count the number of debt counselling clients that drive cars that they cannot afford" says Hirst. Sure, it's great to drive a flashy sports car and wear designer labels, but if you are really worried about looking good in front of the neighbours, think about how silly you will look when the bank repossesses your car in the driveway while the Jones' are watching. No matter how vain you are flashy cars and labels are luxuries, not necessities. A cheaper make of vehicle will also save you on insurance costs.
3. If you have gold coins to spare, you shall invest them wisely
For most South Africans, being unable to pay their mortgage is one of their greatest fears. To vastly decrease the total cost of your home loan, pay in extra when you can in order to save on overall interest costs - over a 20 or 30 year loan, the saving can be astronomical.
4. You shall not "swipe now and pay later"
Credit cards are great when you can't find an ATM, but relying on them to provide you with cash you don't actually have can be catastrophic. "Almost every debt counselling client that walks through our doors has a number of credit cards that are accruing huge sums of interest every month" says Hirst. With credit card interest rates as high as 27%, a simple shopping spree could end up costing you in the long run if you don't pay off what you owe in full. "By all means, use a credit card, but be certain that you can pay back both the cost of the goods and the interest you'll owe on them.
5. Renting is not a sin
"South African's have a mentality that renting is a sin, but in times of rising interest rates and high food costs, the knowledge that your rent is fixed for the term of your lease is a source of great comfort." Hirst also says that people need to realise that they could probably rent the identical property they own for a sum that is substantially less than their bond repayments. On top of that, your landlord is responsible for any maintenance on the property, so think long and hard before you put your foot on that property ladder.
6. You shall not sit back and wait
"The minute you think you may be in some form of financial strife, you need to take control of the situation", says Hirst. "Contact your creditors, get hold of a debt counsellor or re-evaluate your budget before it gets too late. "At least half our clients should have contacted us several months earlier, but because they dig their heads in the sand and ignore their problems for too long they end up being in financial strife instead of nipping the problems in the bud before they escalate.
7. You shall not follow the herd
With so much financial advice available, it becomes easy to read generic solutions and tailor them to your own financial situation.
8. You shall shop around for you mortgage lender
"Most people in South African have been with their own lender so long that they have no idea what interest rate another institution might offer them on their mortgage." With products like remortgaging becoming increasingly popular, it makes little sense for people to become passive passengers in financing their home. "Approach a different lender or a broker to see whether moving your home loan might be a worthwhile option. It'll cost you in cancellation fees, but it may well save you a fortune in the long run."
9. You shall eat the food your family prepares
Everybody likes to eat out, but it's the little things that add up when you are under pressure. Eating out three times a week is not something that you should become used to, especially if you are a family of four, and curbing spending of this kind could well save you the extra money that could keep your household out of the red.
10. You shall not overpay on your insurance
You need insurance - you only need to have a car accident without cover to find out how costly being without insurance can be, but there is no reason you should be paying excessive amounts for it. With so many options available, take your time to shop around and make use of tools like independent comparison websites to find you the best deal - the big names don't always provide the most cost effective cover.