5 Tell-tale signs that you need debt counselling

Managing your finances in the current economy, even to those who are deemed as “well-off”, can be a challenge. Whether it is juggling school fees and living costs or a bond and a personal loan, debt is inevitable. Unfortunately for many, the realisation that they are in financial trouble comes too late. JustMoney looks at the five tell-tale signs that you need debt counselling.

“On reflection, many of our clients realise that they could have prevented their financial stress if they had seen the tell-tale signs indicating that they were on a slippery slope towards financial stress. Preventing poor financial decisions and knowing when to ask for help is by far the best way to avoid financial disaster,” states debt counselling firm DebtBusters.

Tip: Apply for debt counselling through JustMoney today.

The debt management company further outlined five signs that could indicate that you need help:

1. You don’t have a monthly budget: While the drawing up and implementation of a monthly budget is vital, it is still something that many people neglect doing.

“Not having a budget means you do not know how much money is coming in and going out of your bank account. It also means you do not know how much you are spending, or what you are spending your money on. A budget is a breakdown of your income and forecasts your expenses. By tracking your actual spend against your forecasted expenses, you are able to control your cash flow and avoid spontaneous spending. Knowing how much money you have left each month after paying all your living expenses motivates you to save for the things you really want so that you don’t have to buy them on credit,” adds DebtBusters.

2. You have never reviewed your credit report: Everyone should know their credit score and should manage what’s on their credit report.

“For all you know you might have judgements on accounts that you think are closed but aren’t and have been gathering monthly fees and charges. If you have never received your credit report, don’t delay. This is the first and most important step to controlling and improving your financial health,” DebtBusters says.

3. You don’t have any savings: It is not a secret that South Africans harbour a very poor savings culture, but the importance thereof can’t be iterated enough.

“Having an emergency fund can save you from having to take out expensive loans when life’s unforeseen circumstances occur. If you are unable to save because your debt repayments are too high, then you need to seek help with your debt. Your budget needs to include a savings portion so that you do not have to borrow when times are tough or when you have to buy something that you really need,” DebtBusters states.

4. You utilise credit to cover monthly expenses: “If you are dependent on credit cards, loans, store cards and overdrafts to buy food and pay for everyday expenses, then you are already on the slippery slope towards financial disaster,” DebBusters iterates.

In this instance, experts advise that you seek help immediately and consider consolidating your debt into one lower monthly instalment. This could help free up some cash flow while saving you in the process from incurring more debt.  

5. You are behind on payments: Failing to make monthly payments can result in a vicious financially pressurising cycle if you miss a payment, the more pressure is added to your finances next month. This will eventually lead to a bad credit record.

“Acknowledging you have a debt problem is a big step, but only half the solution. If you are serious about helping yourself towards a debt-free lifestyle, you need to talk to a professional that is equipped to help you,” DebtBusters adds.

If you found yourself identifying with the above signs, it may be that you are in need of debt counselling. It is advised that you contact a financial advisor, at your local bank branch, or alternatively contact a debt expert like DebtBusters for a free credit check and debt assessment.