South Africa is an expensive country to live in, although our economy does not compare to certain international markets, the cost of living is on the constant rise. This means that consumers are faced with stretched budgets, and undergoing debt review means handing over that budget to a 3rd party who will restructure it completely and dictate how you spend your money.
A debt review budget makes provision for a rehabilitation fee, and that fee is deducted from your net income before the counsellor begins budgeting for essentials such as food, clothes, housing and transport. This financial plan does not allow for entertainment costs, and should a consumer wish to spend on that, they will have to use the funds set aside for essentials.
Although this sounds strict, counsellors make excellent provision for this in a debt review budget, and a consumer through frugal activities, and minor sacrifices, won’t need to give up everything they enjoyed before debt review. Although the benefit of debt review most certainly outweighs the few sacrifices that will be required.
As much as debt review will assist a consumer in managing their debts, it also serves as an education for the consumer. Living within the means of the new budget, will teach a consumer how to spend their money carefully once they complete debt review. Secondly once the money owed to creditors is freed up, the consumer will have the necessary know how and education to begin saving instead of spending recklessly.
Article written by: Andrea van Tonder 03-2013