Avoid a debt hangover by applying these three simple rules

Applying for a loan or a credit card can be exciting. Having extra cash available for your holiday or an unplanned shopping spree can be exhilarating but every high unfortunately will end in a low. In this case the low comes in the form of a monthly payment usually in the shape of a debit order and the money you spent in a matter of weeks will now take years to repay.

Symptoms of a debt hangover may include – insomnia, stress and creditor harassment. Applying a few rules when making debt will help you manage your relationship with your credit cards and personal loans.

Rule #1 – Never borrow to pay for what you don’t need.

Making debt to pay for entertainment or any non-essential expense will probably give you a bad debt hangover. Having to pay for something you don’t have anything to show for is painful. Using credit cards to pay for holidays, expensive clothing or gadgets you don’t need is a big no no. Rather save up for these splurges and sleep better afterward.

Rule #2 – Always keep track of debt obligations by way of a budget.

Having one too many is never a good idea. Keeping track of how much money you have to spend on debt obligations every month will give you a good indication if you can afford an additional debt repayment. If you already have a lot to pay stay away. Finish of the debt you have before making any more. Your budget is a map to your finances, use it wisely.

(Contact Credit Smart for a FREE credit report. This can help you determine your monthly obligations.)

Rule #3 – Debt is not an asset.

You’ve heard it before “A vehicle is an asset, it’s okay to splurge”. If you cannot afford the repayment it is not an asset but a burden. Make sure you check your budget before applying for asset-based finance like home loans or vehicle finance. Asset financing can be very expensive. Do proper research on the type of financing as well as the asset you are buying. Asset based finance is usually a long -erm agreement with some long -term consequences.

If you cannot afford repayments or you are in arrears with payments contact Credit Smart immediately for a solution. Credit Smart can provide a plan to pay off the debt you have incurred already and will be able to protect you from possible legal action. Don’t wait until it is too late.