Debt and financial planning

Debt can be an obstacle in preventing you from living your best life possible with the money you have. Debt can spiral out of control quickly and too much debt can cause stress, family pressure and even affect your work. 

The first step to a successful financial plan is to set up a budget and to stick to your budget monthly. Within your budget, your priority should be to settle debt.  There are a number of online budget calculators to get you started, check out www.discovery.co.za/investments/budget-calculator .

Try an app such as 22seven (Old Mutual), My Financial Life (Nedbank) or Money Smart. I personally use an excel spreadsheet, find something that works for you and stick to it. 

Not all debt is bad and to get the best deal possible for good debt you need a good credit score. A credit score is a value that represents your history of punctual payments on credit accounts. If you pay accounts late  points are deducted from your score, and point are added to your score for timely and full repayments.

A good credit score increases your likelihood of being offered credit when you apply for it, for example a bond, a loan or even a cell phone contract. It can also give you access to lower interest rates. Additionally, a good credit score can also benefit you when applying for a job, as the National Credit Act allows employers to check a candidate’s credit status.

You can improve your credit score by paying off your debts on time and never missing monthly payments. Also remember not to use debt for smaller purchases, it should be reserved for larger items such as a home or car loan. There are many companies that offer you your credit score for free, I like the Sanlam credit score report available at www.sanlamcreditsolutions.com.

Taking control of your debt will help you bring order to your financial life and enable you to start a journey to fufil your dreams and goals.