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Cape Town - Credit cards are like little soldiers marching consumers one day at a time closer to their ruler - debt. That is, every time you swipe, you become less free, warned Kanan Wealth MD Stuart Kantor.
Staying out of debt should be the goal of every consumer, regardless of the time of year.
However, as the festive season is upon us consumers fall victim to the spirit of the silly season, and with 13th cheques in their pockets too, they readily go with the flow and somehow drum up the notion that all slates are automatically cleared when the clock strikes twelve, he said.
There are a large percentage of consumers who sometimes with the best intentions and the best credit track records fall into the trap of festive season debt.
“Debt is not the end of the world if it can be paid off, but this whole living for the moment marketing campaign has gone too far.
"Consumers need to pace themselves and plan more than ever before, especially since modern medicine and generally improved living standards has enabled individuals to live for many more moments than they may care to imagine," said Kantor.
Lloyd Buthelezi, General Manager: Nedbank Financial Planning, likened the temptation to overspend in December and January to robbing from the future to pay for the present.
He acknowledged that the festive season spending is hard to control, but cautions that this desire to overspend needs to be managed to avoid future financial problems.
For those fortunate enough to receive a bonus or 13th cheque, it would be wise to set money aside towards "a rainy day", Buthelezi said.
There are many avenues consumers can pursue for this: it could be through unit trusts or ETFs, an education plan for children or grandchildren, saving towards a specific goal, or beefing up retirement savings. Paying down bonds and other accumulated debt is also part of a savings plan as it helps to free up capital.
Apart from having some sort of savings strategy, limiting debt is a big factor, especially at the end of one year and the beginning of another year.
"Building up credit card and other loan debt as a result of having too much fun during the festive season could cause you cash flow problems in early 2014, so think before you spend," Buthelezi cautioned.
Kantor said consumers need to live within their means and budget on a regular basis.
Correct budgeting will help with the ‘financial hangover’ that is always experienced in January.
“I suggest trying to at least split any bonus received over December and January. A humorous but relevant tip would be that if you can delay spending in December, then you may be able to start a small business as lender of last resort in January.”
Staying out of debt should be the goal of every consumer, regardless of the time of year.
However, as the festive season is upon us consumers fall victim to the spirit of the silly season, and with 13th cheques in their pockets too, they readily go with the flow and somehow drum up the notion that all slates are automatically cleared when the clock strikes twelve, he said.
There are a large percentage of consumers who sometimes with the best intentions and the best credit track records fall into the trap of festive season debt.
“Debt is not the end of the world if it can be paid off, but this whole living for the moment marketing campaign has gone too far.
"Consumers need to pace themselves and plan more than ever before, especially since modern medicine and generally improved living standards has enabled individuals to live for many more moments than they may care to imagine," said Kantor.
Lloyd Buthelezi, General Manager: Nedbank Financial Planning, likened the temptation to overspend in December and January to robbing from the future to pay for the present.
He acknowledged that the festive season spending is hard to control, but cautions that this desire to overspend needs to be managed to avoid future financial problems.
For those fortunate enough to receive a bonus or 13th cheque, it would be wise to set money aside towards "a rainy day", Buthelezi said.
There are many avenues consumers can pursue for this: it could be through unit trusts or ETFs, an education plan for children or grandchildren, saving towards a specific goal, or beefing up retirement savings. Paying down bonds and other accumulated debt is also part of a savings plan as it helps to free up capital.
Apart from having some sort of savings strategy, limiting debt is a big factor, especially at the end of one year and the beginning of another year.
"Building up credit card and other loan debt as a result of having too much fun during the festive season could cause you cash flow problems in early 2014, so think before you spend," Buthelezi cautioned.
Kantor said consumers need to live within their means and budget on a regular basis.
Correct budgeting will help with the ‘financial hangover’ that is always experienced in January.
“I suggest trying to at least split any bonus received over December and January. A humorous but relevant tip would be that if you can delay spending in December, then you may be able to start a small business as lender of last resort in January.”
