It’s almost a norm for many. The SMS from the bank comes in at midnight: “RXXX paid to your account.” But by the time you wake up to get ready for work in the morning, that salary has been whittled away by debit orders – and there are still loans to repay, bank charges and rent or the bond.
How does one free up cash flow in these kinds of circumstances where debt seems to leave very little wiggle room? Here are five things you can do if you’re struggling.
1 Negotiate a single credit agreement
When you switch your qualifying credit into a single agreement you could save on monthly credit service fees, according to Emma Mer, CEO of FNB Loans.
Read more | How to combat debt and make your salary last till the next month, according to financial expert
“Your revised personalised interest rate might be lower than the interest on your previous repayments which can help you save on interest paid and in turn free up cashflow.”
2 Take advantage of rewards programmes
Many South Africans benefit from loyalty programmes to pay for things such as petrol and groceries. “Reward programmes can unlock multiple ways of saving; it could be through discounts depending on your reward tier or through maximising your spend with rewards so that you can minimise your cash spend,” says Emma.
3 Re-examine your habits
Try cutting back on those little but expensive habits. If you’re a smoker, buying one R40 packet less a week will save you at least R160 a month. Giving up three takeaway coffees a week at R20 each will save R240 a month – or R2 880 a year.
Read more | Want to have extra cash for a new car, stationery or December? Here's how to make saving a habit
Having one less bottle of wine over the weekend will save you around R320 a month. And take lunch to work instead of buying food. If you can save R20 every day of the work week, you’ll be saving R400 a month.
4 Understand the cost implications of the products and offerings available to you
Put that any windfall you might get to good use by paying a little extra on debt such as your home loan, for instance, and that will reduce the monthly amount you’re paying on insurance products linked to your bond. “Should you make any extra payments into your home loan, you’ll not only save on interest, but your Basic Mortgage Protection Plan or Dynamic Life cover (tailor-made insurance products) and premium will also reduce,” says Lee Mhlongo, CEO of FNB Home Finance.
5 Review your investments
New products are introduced to the market all the time, so you might not be getting the best deal. Speak to a financial adviser – they might advise you to move your unit trusts to a fund with lower fees and better returns. Remember, your investments always need to grow by more than inflation so your money retains its buying power.
Additional reporting: Letitia Watson
