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Pretoria - Neil Roets, CEO of Debt Rescue, one of the biggest debt counselling companies in South Africa explains the importance of budgeting and the steps to take should you experience financial stress.
“Budgeting is a simple principle that has the power to make or break you financially’, says Roets. “It is simply a plan of how to spend your money and a way in which you balance your income with your expenses.”
This sounds simple enough, but you have a problem if it does not balance. Many would ask why they should go through the extra effort of drafting a budget, but there are numerous benefits to drawing up and sticking to your budget.
Roets says: "Not only will budgeting give you control over your money and keep you focused on your money and saving goals, but it will also give you the control to save for expected and unexpected costs.”
Your budget can provide you with early warning signs to identify potential problems and giving you time to take the necessary steps before it is too late.
If your budget does not balance, it means that you are finding yourself in the same situation as almost half of the credit active consumers in South Africa. It means that you have become, or are on the brink of becoming over-indebted.
Roets says the fact that most consumers owe more than 75% of their monthly salaries to financial institutions shows just how dire the situation actually is.
This financial stress can influence your health and wellbeing and have a negative impact in your workplace. Studies show these consumers are more likely to lose sleep at night; have severe anxiety; take frustrations out on others; experience depression; have ulcers, digestive problems, heart problems and migraines.
The advantage of budgeting is that the warning signs will give you sufficient time to seek the necessary help, which you can obtain in the form of debt counselling.
Debt counselling remains the best way for consumers to manage their debt load by negotiating with creditors and paying off their debt in smaller instalments over a longer period of time.
“At Debt Rescue we believe that debt counselling is not only about repaying your debt, but also about financial education,” says Roets.
"Our main aim is to help consumers become debt free in the shortest possible time within the limits of their affordability. Debt counselling is a legal process and a court order will be obtained that will restructure the consumer’s debt.
This safeguards the consumer against onslaughts from unreasonable credit providers and ensuring a smooth road to financial freedom.
Roets notes that, “the successes of debt counselling are now becoming more and more apparent as we are seeing a drastic increase in the number of consumers that managed to settle all their debt while under debt counselling, with a 300% year-on-year growth in the number of clearance certificates issued”.
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