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Tuesday, February 16, 2010

Should i save my extra cash or use it somehow?

One of the major causes of people having their debt review terminated is due to a missed payment because of some unplanned for emergency.

Many under debt review are still in the "emergency = credit card" mindset. However once having entered debt review a consumer no longer has access to credit.

Therefore a cash float for unplanned for emergencies is vital.
As is saving a small portion of their budgetary amount each month towards yearly expenses (eg. TV License, Car License, School clothes and books. The debt counsellor should have made this clear to them during the bugeting phase of the debt review.

What if the consumer is able from time to time to generate extra funds? What should they do with them?

Well once building up such a cash float then it would be best to speak to your debt counsellor. Tell them of the available funds. the debt counsellor may be able to advise you on which accounts would most benefit from such extra payments.

They could be used to close smaller accounts which provides a physcological boost to the client.

They could be apportioned to a high interest rate account which will ultimately save the consumer funds

or
they may be added to a large balance account such as bond repayments
On a home loan of R1m, paying an extra R500 more than the normal instalment will take R250 400 off the total interest paid, and shorten the time it takes to repay by almost three years.

As a note: If you do make any extra payments to creditors yourself be sure to inform your debt counsellor so that he can inform the Payment Distribution Agency (so they can ammend their records) otherwise you could find funds from your monthly repayment amount being apportioned to this account even after it has been completely paid up.

If they become regularly available then put these funds into the debt review process along with your regular monthly repayment amount. The regular monthly repayment amount is reviewed annually by the debt counsellor in any case and the debt counsellor will then determine where they can be used most effectivly or will apportion them on a prorata basis to all creditors.

Friday, February 5, 2010

Latest stats regarding credit in SA

According to Standard Bank economist Johan Botha, households are in deep trouble.

Out of the 18.01 million credit-active consumers at the end of September 2009, only 9.9 million (55%)were in good standing. So basically only half.

Also three million consumers(17%) were more than three months behind, and 2.7 million (15%) landed up with adverse listings on the credit bureaus.


Property:

In regard to sales of property Botha says: "It's not an ideal time to see house prices shooting upwards,".Why? He reasons: "The interest rate will start rising again at the end of the year and the country's seen huge job losses." so he does not forsee a rise in values of property sales nor this being a good thing anyway as few could afford it.