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Expert tips for enjoying life after 50

The dangers of falling into a debt trap

Debt is a humiliation by day and a worry by night!

People’s propensity to enter into debt is enormous. This is already alarmingly high in most countries and it is growing at an amazing rate.  Almost half South Africa’s consumers have a bad payment record – this means that they are more than three months in arrears with payments on their debt.

The question that arises is why?

Probably the most important reason is that people do not plan their finances. They don’t keep a regular budget. They spend impulsively. They often want a quick fix for financial problems and perceived needs and they mislead themselves by thinking that if they borrow money to breach and financial shortage, and that it will solve their problem. On the contrary, it usually cause them to sink even deeper into financial trouble.

Budgeting

By keeping a regular budget, and updating it once a week, can help consumers to stay out of debt. It can help them to discipline themselves and to live within their means.
But to be effective, it requires self-discipline – for the whole family.  A tendency towards ‘instant gratification’ can easily lead to impulsive buying without even making sure that the budget will allow the purchase.

Purchasing on credit

The psychology of “buy now pay later” is dangerous. Retail businesses often create such a mind-set in consumers by means of their ad campaigns. It can be compared to alcohol abuse which provides immediate pleasure but the inconvenience of babalaas later.
This tendency of consumers is also often abused by so-called Micro lending companies, (sometimes called loan-sharks). They lend money to consumers in distress at exorbitantly high interest rates. The lenders then often become financial ‘slaves’ of these companies.

And don’t forget the credit card. Psychologically it is much easier to spend through a credit card than by actually paying out hard cash.

The most important habit you should try and acquire for yourself as well as your family remains to live according to a budget and not to spend anything that is not budgeted for.

Do you have a strict budget that you stick to?

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