Need Help Paying Bills?
South Africa’s economy is on the skids. A combination of poor governance, irrational policy making and endemic corruption is close to forcing ratings agency to downgrade South Africa’s sovereign credit rating to junk.
Junk status equates to more costly borrowing and soaring inflation rates. Food, fuel and retail goods continue to skyrocket in price, leaving hard-pressed consumers with little money to cover bills.
If you’re one of the millions of South Africans who’s struggling to pay their bills month in and month out, there are some strategies that may help you regain your financial footing.
Negotiate better payment plans
Before you end up getting letters of demand, and your credit rating takes a dive, be sure to contact the people you owe money to, whether it’s a retail store, a vehicle financing company or the bank.
Explain exactly why you’re no longer able to meet the monthly re-payments, and offer to settle the debt over a longer period of time, and at a better rate. If you’re honest and upfront, and are prepared to negotiate a revised payment plan in good faith, the likelihood is your creditors will play along.
Implement lifestyle changes
Cut back on all non-critical expenses, such as fine dining, costly mobile phone contracts, gym membership and the cinema. Assess your car and household insurance policies, and shop around for more affordable premiums.
If you’ve subscribed to a medical aid option or plan, see if you can downgrade to another plan or scheme without compromising your cover.
Opt for free outdoor activities for the kids, avoid the shopping malls and cancel your DSTV contract. You’ll be amazed at how much more money there’ll be at the end of the month. In short… live well within your means.
Make use of the access bond
If you have a mortgage bond on your home, you can borrow money against it. It is the cheapest and most flexible way to plug the financing gap.
In order to get your hands on the cash, there must be an access facility in place, and you can only loan the funds you have already paid back to the bank. It’s important to note that if you do access funds from your home loan, it will take longer to settle the debt, and the more interest you will have to pay.
Boost your income
Find ways to add to your monthly income by tapping in to your experience, talents and creative skills. Offer consulting services on the side. Produce something that sells – art, crafts, clothing or food – or list a room for rent on Airbnb.
If all else fails, you can take on a second job working in a restaurant or bar, or you can moonlight your services after hours as a freelance web designer, app developer, babysitter or personal chef.
Get a bank loan
If you’re really stuck, and none of the above-mentioned strategies pan out, you can always apply for a personal bank loan. You’ll need a fixed monthly income, and a clean credit history to qualify for the funds.
In these troubled economic times where the banks are losing market-value, there is no guarantee you’ll get the proverbial nod. If you do qualify for a personal loan, you’ll have to pay fixed interest based on the amount you want to borrow, and the repayment terms of the loan.
As a personal loan is an unsecured loan that has no anchor asset or assets, you’ll pay a much higher interest rate. Similarly, if you choose to borrow money from an institution other than a bank, you’ll be locked in to an interest rate double that of a home loan.
Use your car as collateral
An innovative solution, now available in South Africa, is borrowing money against a fully paid up vehicle. You’ll have to leave your boat, motorcycle, truck or car in safe keeping as collateral, but once you’ve paid back the loan with the agreed interest, it’s yours again.
Pawn My Car offers same-day cash loans that are paid directly into your bank account. The process is confidential and transparent.
