How debt can cripple your finances
Reports show that South Africans spend around 63% of their take-home pay to service their debt. Here are some dangers of servicing your lifestyle using debt.
The majority of South Africans find themselves entangled in debt.
Sadly, debt has several devastating effects, especially if it is not well managed.
Let's look at how and why you need to stay away from debt.
Debt cripples you
Taking on debt means you have to also pay back interest. You part ways with some of your hard earned money just to pay off debt.
Rather than buying things on credit, rather look at ways you can save towards buying the things you like.
READ: Three tips to help you get out of debt sooner
Spending money before you get it
Getting to debt means your money gets used up even before you receive it.
The danger with this is that if you ever find yourself in an emergency situation that requires money, you might need to take on more debt to service the current debt.
Rather give yourself a target of when you would like to purchase things and wait until you get the money.
Funds a life you can't afford
Taking on debt to finance your lifestyle means you are actually living a life you cannot afford. If anything were to go wrong, for instance, if you were to lose your source of income, all the things you financed using debt might be taken away from you.
Do an honest evaluation of your life and only live within your means.
READ: A consumers ‘overstretched’ as debt counselling increases