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May 28 2012 07:53
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Recently, a Fin24.com user asked for help to sort out the desperate state of his finances: "I'm stressed, I've tried everything but nothing seems to work.
"I draw up a spending plan which will help me to become financially independent. In theory it works, but in practice it doesn't.
"I earn R22 000 a month. Currently I'm under debt review and have to pay R7 700 each month to cover the instalments for my bond, credit card, garage card and overdraft. I pay R880 in school fees for my son, R4 444 in educational fees for my wife, rates and taxes of R1 500 and the rest goes toward food, petrol and DStv.
"I don't understand why every single month I do not have a cent in my pocket, It takes me a week to spend R22 000.
"I desperately need to get out of debt review. What is the solution?"
André Snyman, head of the debt counselling group Consumer Assist, advises:
The most important aspect of money management is a proper budget and discipline.
Your budget must be done on a daily, weekly, monthly and annual basis.
Only when you keep track of money used on a daily basis will you see why you are falling short. We tend to forget about small daily expenses that quickly add up to R100. Other expenses, like television and vehicle licences, are often also not considered.
Look at ways you can save money. Change from DStv to new options available in the market and only pay for channels that your family needs.
Take a look at your short-term insurance rates and find out whether you can't save money on your premium - particularly by changing the value of your vehicles. (Every year, your car will depreciate and the insurer will only reimburse the book value.)
Change your bank account if you can get a cheaper alternative elsewhere. Absa, for example, has an account for clients under debt review which has very low fixed fees to assist you to budget.
Once you've drawn up a realistic budget, you need strict discipline to see it through. Set cash aside for budgeted purposes.
Get the whole family's buy-in for the budget. Have a meeting and explain the circumstances. Make sure you meet regularly (at least monthly) to revise the budget and work in rewards if you keep to your budget.
Try Fin24.com's
budget calculator to assist with your household finances.
- Fin24.com