This is the time of year for fun and celebration, but make sure you don’t overspend
The introduction of the new National Credit Act changed many people’s lives. Thanks to the Act, which was introduced in June 2007, thousands of blacklisted people who qualified for amnesty had their names removed from the list. They will now be able to buy on credit, but more importantly, they will also enjoy more protection when entering into credit agreements.
Although the Act was introduced to protect us as consumers against lenders, we are still responsible for managing and spending our money wisely. It is easy to buy on credit, but before signing a credit contract, make sure you can pay back your debt.
To help consumers work wisely with their money and avoid falling into the debt trap again, the Act also gives credit education.
At this time of the year, many people will receive bonuses or stokvel payouts. Others will be sharing the money they saved throughout the year, the so-called mogodisano in seSotho.
The Credit Information Ombudsman gave some tips on how to avoid overspending.
- Make a list of all the things you want to buy for the December holidays. Then add your January expenses to the list.
- From the main list, make a sub list of the critical needs like rent, food, transport, school fees and uniforms for January and put aside enough money for it.
- If you know that you cannot hold on to cash for a long period, you can ask your employer to keep some of your bonus and pay it to you in January.
- Leave enough money to enjoy the festive season, but spend wisely to avoid the loan sharks (mashonisa) in January.
Tips for saving money over the holidays
- Set aside between 15 and 20 per cent of your bonus or savings for a longer term goal like retirement, education or housing.
- You don’t have to buy expensive Christmas gifts. Rather find out what someone really needs and buy a less expensive, but useful gift or make something.
- Think of three things that you can cut down immediately, like alcohol or cigarettes and use the money for something you really need, or save it.
- If you are a member of a stokvel, encourage members of your group to put aside some of the money they would use for year-end-parties for something like paying school fees up front.
For more information or free advice on the new Credit Act, call the office of the Credit Information Ombudsman: 0861 662 837.