The festive season is upon us but people should still practice caution when they are spending their money so they don’t end up with bad debt. Picture: Freepik
It’s almost Christmas which means South Africans are enjoying the festive season.
Given that people are facing financially draining challenges, it would be understandable if they would want to let off some steam and enjoy the silly season without having to worry about money.
While people may think it is worthwhile to incur additional Christmas-related debt by buying expensive gifts or extra decorations, the extra debt will cost them in the long run.
According to Neil van der Walt, marketing manager, DebtSafe, everything extra that people buy on credit adds up in the end and it will continue to deprive them of their financial freedom.
What is bad debt and why should you avoid it this festive period?
According to Van der Walt, bad debt is credit that:
What are examples of bad debt?
Van der Walt said that examples of bad debt include credit cards, personal loans, temporary loans, pay day or cash advanced loans and retail store or clothing accounts.
Know your financial situation and the value of your current debt
Have you scanned through some recent bank statements, inspected your credit record, and determined your debt-to-income ratio?
“Know where your finances are at and what ‘bad’ debts to avoid/get rid of soonest – it can be the warning sign you need to curb any festive spending this year,” Van der Walt said.
Stick to your allocated Christmas budget
Van der Walt said that apart from the usual December month budget, you also need to include the amount that you have available for Christmas-related spending.
“When it comes to preventing the adding of additional bad debt to your pile, it is vital that you continually work on your personalised debt management plan.”
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