When should you consider debt counselling?
Falling into unmanageable debt can be a slow process. Over the course of a year, you may slide from someone who’s meeting debt payments to someone who’s struggling to make ends meet.
If you find yourself answering “yes” to any of the below questions, it may be time to take a hard look at your financial situation and consider debt counselling as a possible solution:
Are you able to save?
It’s recommended that South Africans save 20% of their income each month. This may be a tall order, even for those who’re not struggling with debt. However, it may also be a warning sign that you’re not managing to make ends meet. Without savings or an emergency fund, you’re at risk of falling into debt as soon as an unexpected expense arises.
Does your debt keep you up at night?
If your subconscious is plagued by your growing debt, it may be a sign that your debt is taking a turn for the worse. You may be in denial about the magnitude of the situation, but your subconscious may be on red alert, trying to warn you to take action. If this is the case, consider getting a second opinion from a debt counsellor.
Do you rely on credit for monthly expenses?
If you find that you need to take out a loan or use credit cards at the end of each month to cover basic expenses, such as food or clothes, you may be in deeper water than you realise. This shows that you’re spending more on servicing your debt each month than you can afford, and it’s only a matter of time before you’re unable to meet your financial obligations.
Are you taking out debt to settle debt?
By taking on new debt so that you can meet your monthly debt obligations, you’re simply perpetuating the cycle of debt. By the time the next month arrives, you’ll have to do the same and you’ll eventually climb deeper into debt. Ultimately, you’ll just prolong your repayment process, and walking such a fine line is incredibly dangerous.
Are you lagging behind on payments?
If you find that you’re taking longer to pay your monthly instalments and you’re skipping certain months because you don’t have enough money to cover these expenses, you may be in over your head. Sit down and take a serious look at your finances, and make sure you get in touch with a qualified debt counsellor for a second opinion.