Holidays are a magical season for giving, but living through festivities doesn’t come cheap for most South Africans. Here’s how you can avoid racking up debt over the holidays and manage your debt better, so you don’t have to ring in the new year deeper in debt.
Say no to holiday loans
It’s tempting to apply for a holiday loan when you don’t have any savings and need extra money to pay for various expenses to enjoy the festive season. Still, it is best to avoid taking holiday loans or any high-interest personal loan used for discretionary and luxury spending in general.
If you absolutely must take a loan, consider a personal loan with a lower interest rate than your credit cards. However, if you’re heavily indebted and barely managing repayments, consult a debt advisor to review your existing debt before taking on any additional damaging credit such as a high-interest holiday loan. Check out our blog, 5 Reasons to Avoid Taking Holiday Loans.
Avoid last-minute credit shopping
An excellent rule to manage debt during holidays is to limit the use of credit cards as much as possible, especially if you’re already reaching the credit limit on multiple accounts and struggle with the repayments.
Tracking your credit card spending is another way to keep the situation under control and better manage debt during holidays. Also, planning festive shopping while sticking to a budget will save you many last-minute impulse purchases on your credit bill and remove holiday stress. Check out our blog, 5 Tips to Stop Adding More Debt During Holidays.
Pay off credit card debt
It’s advisable to pay off your credit card debt in full as much as possible instead of wrapping up the holiday season with a larger credit balance repayable in the new year. Reducing the balance on one or more of your credit cards decreases your total debt, making it easier to manage debt over the holidays.
A debt counsellor may recommend debt consolidation to eliminate multiple credit card debt or limit the damage to a single credit account at a more favourable interest rate. This has the advantage of reducing the high-interest charges and making unsecured debt more manageable. To find out how to get rid of debt faster, check out our blog, Pay Off Multiple Debt: Is It Ok to Repay Only the Minimum Monthly Fees?
Consult a debt advisor
Managing debt over the holiday season becomes a stressful event when your salary barely covers the monthly debt repayments, or you can no longer afford your existing debt instalments due to loss of income. Perhaps you’ve always relied on that extra year-end bonus to make it merry, which may not be the case anymore.
Extreme circumstances call for professional help. If you’re over-indebted and in danger of defaulting on repayments, reaching a debt adviser or counsellor is the bold step forward to assess the problem and reduce escalating debt before it gets worse.
Furthermore, a debt review or debt counselling process will impact your budget positively and redirect money towards discretionary spending. You will not have to rely on extra credit or loans to make it through the end of the year, and you will not be able to add to your renegotiated debt repayment plan until your debt is fully paid to creditors.
Our professional ezDebt advisers help you stay on track with debt repayments through affordable debt counselling and debt consolidation. All our debt counsellors are registered with the National Credit Regulator (NCR). Get in touch at www.ezdebt.co.za