RD Debt Counselling is a professional and reliable debt counselling firm in Benoni, Gauteng. We help you become debt free in the shortest possible time.

Lay-bye instead of using your credit card

Lay-bye instead of using your credit card

(Lay-bye for the kids’ school clothes now and get them in January)

We’ve all heard about Lay-bye, but very few people have used it, but it is a very good way to get the more expensive things, by paying for them with cash over a few months.

To lay-bye goods, the consumer pays a small deposit and subsequently makes regular repayments until the total price is paid. Each lay-bye agreement is different, but all include three or more payments

Of course, there are some things to be careful of what you need to know before you enter into a lay-bye agreement.

Many people have used lay-bye for many years especially in the clothing and small appliance market and generally, it has worked well.

READ MORE: What is responsible credit? 

Truworths, as an example, is busy rolling out a nationwide lay-bye programme, and they expect to add a couple of percent to their sales as a result

We all know online retailers as the place where you use your credit card, well there’s good news, a number of online retailers are allowing customers to pay off that expensive pair of jeans or the new Kenwood Mixer over a few months, using a lay-bye system. This is following the trends in the US and Australia, and they believe it is because people are becoming more nervous about using credit cards and getting into too much debt.

RD Debt Counselling did a search and came up with a few online retailers, some who offer lay-bye for their in-store products, and then a few who you would use to lay-bye your money and then when they had it all they would pay the online shop and they then deliver the goods that you bought.

Advantages of lay-bye

Interest-free – you will pay close to double if you take the same item using store credit. Even a credit card paid in a few installments will attract interest and fees.

Pay more or less than agreed, but you have to finish in the contract period.

Goods are the same price as cash – in easier installments.

READ MORE: Banking and saving for children – teach children about money

Disadvantages of lay-bye

If you change your mind you could lose a cancellation fee (1%).

Not all businesses are honest – make sure you hand your hard earned cash to a reputable business.

and why not start planning for next year and the kids school uniforms, January is never an easy month, so if you go to the school uniform shops now and lay buy for the January uniforms, then by the time January comes, you will have only a small payment left, so it’s your choice, either you lay-bye and breath easier in January, or you get more debt by swiping your credit card.

So make January easier and lay-bye now for the kids’ school uniforms.

What is responsible credit?

What is responsible credit?

In this article, we will discuss the difference between responsible credit and not-so-responsible credit.

At RD Debt Counselling, we have been working with client’s credit for 10 years and I like to think I have seen it all, but I am still sometimes surprised.

I do understand that when there is financial pressure, people don’t always think about what is going to happen long term, they just want to solve the problem that is in front of them right now.

A typical example of this is a client who came to see me with 6 cellphone contracts, most of which weren’t even used. After we had chatted for a while, she explained that Game gives vouchers when you take a cell phone contract, so you take the contract and then Game gives you an R1 000 to R2 000 voucher with each contract. She had cash flow problems and was buying food with the vouchers for her family. Every time she was short on money, she would take out another cell phone contract.  This solves the problem this month, but next month you need to pay the contract

What I am saying is that some credit is responsible. Let’s be honest, there are very few people who can afford to buy a car or a house for cash. Student loans for education are necessary to give your child the best possible advantage for the future, and if you are starting your own business, to make more money from the money borrowed, then it makes sense.

When you are using credit for most other things it is irresponsible.

Loans or accounts for buying TV’s, beds and hi-fis is irresponsible. Not only because it gets you into the debt trap, but because you pay almost twice as much for the same thing that you could have bought for cash if you had saved for a few months.

Another couple had an excellent income, both husband and wife earned good salaries, together, about R80k, but they bought everything on credit, from bed linen to tvs. They had 5 TV’s, many vehicles including four-wheelers, bikes, caravans, and trailers. I am not saying that you shouldn’t have these things, but lots of nice things on credit equal to lots to pay back every month. When you can afford it there is no stress, but what happened here was that the wife was put on short time for about 3 months and then the problems start because they couldn’t pay the full amount every month, and then the arrears started.

Buying food on credit is a big no-no for me.  If you have to buy food on credit to get through the month, then you are overindebted and you are caught in the debt trap because you do not have enough money to pay for your living expenses after all your other debit orders have gone off your pay at the end of the month.

Buying clothes on credit is also one of those that get out of control for many people. When you buy for cash, you have to stop when the cash runs out. Buying on credit means that you can carry on buying with money you don’t have.

Month-end loans are the most dangerous credit you can get.  Month-end loans were developed for the emergencies in life and you can get quick access to money and sort out the emergency and at the end of the month they take their money from your salary,  but the reality for many people is that they take month end loans every month, and it starts at R2 000 and then you need to pay R2 500 back, (these are not exact numbers, but to illustrate what can happen), so you borrow R2 000 and at the end of the month you are debited R2500, that leaves you short R2 500, so then you need to borrow R2500 and then pay back R3 100, and so the months go on until you are borrowing R5000 and paying back R6000, then you are so stuck in the debt trap, you cannot get out.

Then my worst of the lot, when money is borrowed to go on holiday, and here I’m not talking about when you plan to attend your son’s wedding who now lives in Canada, so you do your planning and go if you can afford the repayments, here I’m talking about people who feel they have to go on holiday to expensive places, but can’t afford it, so they take a loan instead of staying at home, and can’t afford the repayments, but at least they had a holiday and can tell everyone they were in Plett for a week and it cost them R7 500 a day for the house, that’s crazy, take one day’s money and have a week of holiday at home, or go camping at Bronkhorstspruit dam, I promise you will have as much fun.

The most irresponsible credit is when you buy something on credit on your name for somebody else who has a bad credit record and asks you to help, I have seen many cases where this is a huge problem,

My favorite story about this is the guy who bought a new GTI for his sister on his name. All went well for the first year or so, and one day he got a message from his sister to say, “I have been retrenched, your GTI is on the pavement outside your house.  He couldn’t afford the extra payments, he didn’t want the car, and to sell a one-year-old GTI, meant that he would lose a whole lot of money.  He applied for debt review and now owns a GTI he never needed or wanted.

So I believe that you need credit for buying a house or a car, Paying for your child’s education, or for a business where you are going to make money.

When you are using credit to pay for food clothing, rent, water and lights and other daily living expenses, then you are not using credit correctly.

When I was young (a lot of years ago) there was an airline that had a radio advert which said, Fly now pay later.

And that’s exactly what wrong credit makes us do, we are happy, we are flying, but the problem comes when it is time to pay later.

Catch Russell on East Rand Stereo, every Saturday morning at 08:15.

Debt Intervention Bill

Everything you need to know about the Debt Intervention Bill

The Debt Intervention Bill is a new piece of legislation and the purpose is to get low-income earners who are stuck in the debt trap out of debt.

This piece of legislation has not been passed yet, so it may or may not go forward, or there might be some changes, but it is very likely to go forward, even if a few things are changed, but it will only start when the president has signed it.

Normally I would wait until the legislation is passed and final and signed and sealed before I would discuss it.  However, there are already some fraudsters out there who are ripping people off trying to convince them that they are agents for debt intervention, so-called “debt intervention counsellors”.

Many people have heard of it and read about it in the newspapers or listened to a report on the news, so if someone approaches you, you are more likely to believe them.

If you get a call or are approached by someone who says that they have been selected to help you with debt intervention, then they are not telling the truth. Do not pay them any money, do not give them any details especially not your personal details and definitely not your bank details.  Be careful, there are a lot of fraudsters out there and we all have to be more and more aware of our bank and personal details.

The Debt Intervention Bill started many years ago, and since last year they have been doing public participation sessions. I went with DCASA (the Debt Counsellors Association of South Africa), to parliament in January this year to make submissions on how we thought the Bill should be written and we made our submissions to the DTI (Department of Trade and Industry ) sub-committee whose job it is to get the bill to parliament.

All the major banks were there, the micro-finance industry was there and many others who were interested in presenting how we thought the Bill should work, and here is what the DTI subcommittee came up with:

The Bill will only apply to people who earn less than R7 500 per month, and have debt of less than R50 000.

So, if you earn R7 600 or your debt is R51 000 you are excluded from this bill.

Another aspect of this bill is that debt can be written off.  If someone has lost their job and over a period they struggle to find employment and can’t pay their debt, the bill makes allowance for all or a portion of that debt to be written off.

Now of course, this is the part that everyone is talking about.  I’ve heard people say: “don’t worry to pay your debt, next year the government will write it off”. This is very irresponsible and for the majority of people, we don’t even qualify to be considered to have debt written off.

Obviously this does not please the banks or the furniture or clothing retailers or the micro-lenders, so there is a good chance that they will fight it in court as soon as it comes out which could delay the implementation even further,

If anyone approaches you and says they are agents or debt intervention counsellors for debt intervention do not pay them anything and especially do not give them your personal or bank details.

It only applies to people earning R7500 or less per month and debt of under R50 000. If you earn more and have financial problems, then a debt counsellor is the person to talk to.

A short summary of the Debt Intervention Bill

  1. The bill is not in operation yet, it has not been signed off by the president.
  2. If you are approached, and someone offers help as an agent or debt intervention counsellor, do not give them any money or personal information and definitely not your bank details.
  3. The Debt Intervention Bill only applies to people earning less than R7 500 per month and with debt of less than R50 000.
  4. The Bill makes allowance for debt to be written off over a period, but only if you qualify and really cannot pay.
  5. If you earn more and have financial problems, you still need to approach a Debt Counsellor.

If you need to contact a debt counsellor, contact us. We are registered debt counsellors in Johannesburg, South Africa.

7 Tips for healthy relationship finances

7 Tips for healthy finances in a relationship

If you’ve ever been in a relationship for any length of time, and particularly if you are married or living together, I can almost guarantee that you’ve had a money fight.

Money can’t buy you love, but it sure can tear it apart.

I’ve been married for over 20 years now. In that time, my wife and I have had times when we had great incomes, opened businesses, had lots of money, had to close businesses and lived on next to nothing for what felt like ages, and come out of it again

I can’t say that my wife and I have got it right when it comes to money and relationships, but slowly but surely if you talk, and then talk some more, you find some middle ground.

What can we do to get our money and relationships better? Here are 7 Tips for healthy finances in a relationship.

Sit Down & Talk

Make sure you remove emotions – this is money talk, keep calm

Stay positive and be honest, if you are not honest it will never work.

Recognize value other than money – Each partners contribution is not just Rands and cents. We each make household contributions, looking after kids, doing all the maintenance, making household items, there are many things that each partner does.

I think one of the big problems here is that we believe that making lots of money makes us good people and when we struggle we are bad.  So showing the world how much money we have will make everyone out there think we are good and clever, most often this is not the case.

Make a plan to meet goals, do the math and make a budget

Work out a system that works for both of you, do a budget and write down all the income and expenses

. Have a plan for if things go wrong – put some money into savings, have an emergency savings fund.

write it down, Write it in a black Croxley book, or open a file on your computer or phone, that way if there are misunderstandings and disagreements it’s on a piece of paper.

And don’t forget, things can be changed as you go along and your circumstances change.

Have a weekly/ monthly meeting

Its’ very important to have regular meetings where you seriously discuss your finances and don’t get interrupted by everything else.

Maybe a finance date, go out for supper, have a picnic, Have some fun to start the conversation by dreaming a little bit.” Talking about your goals and plans for the future, how close have you got to that dream holiday, or the kitchen upgrade, or the swimming pool, or paying off as large loan or Pieties university fund, and after a while, look at your progress, it will encourage you and your partner to stick to the plan if you see you are making progress and see if it’s working.

Share, divide, pay allowance or keep totally separate

Its very difficult one to tell people what is right and wrong,. As peoples circumstances and personalities differ

Generally, there are four main ways you can work with money in your relationship.

  • keep separate accounts
  • share and manage everything as a couple
  • the main earner pays their partner an ‘allowance’
  • share some responsibilities but keep some things private.

Keeping your money totally separate

Here you don’t have a joint account, you’ll both keep your earnings separate.

Any bills you share like the rent or mortgage or school fees or groceries, need to be split and that’s the decision you make in your meeting.

Sharing everything in a joint account

You can combine all your income into a single pot and use this for all your expenses from small, everyday things to paying the rent, mortgage and bills.

This can make budgeting a lot easier, but you’ll need a joint account for it to work smoothly.

That way, you’ll both have control over the money and you’ll both be able to see what the other person is spending, but certain personalities need more privacy

Dividing it up into mine, yours and ours

When you’re sharing responsibility for finances, a compromise could be the best way to go and a l;ot of people use this

You can open a joint account to take care of the bills, but keep your own accounts to pay for the things you individually want and that is private and your own

It’s a great way to make budgeting easier and keep some independence and privacy.

Main earner pays partner an allowance

If one of you isn’t earning, or earning less than the other, you could both keep separate accounts and have the main earner pay their partner an allowance.

The main earner can transfer an agreed amount each week or month to their partner’s account.

You can both decide whether the amount that is transferred is money for household bills and spending money, or just personal spending money.

Protect yourself and your family

Avoid joint debt

If you have any joint debts, remember that both of you are liable for repaying them in full.

If your partner doesn’t pay their share, you’ll still be liable.

So don’t agree to new joint debts unless you are entirely happy with the arrangement.

  • Living with, or being married to someone with a bad credit score won’t affect yours.
  • However, as soon as you open a joint bank account or take out a mortgage together, your credit rating could be affected.

In particular, don’t agree to debts secured on your home. In other words where you put your home as security for other debt.  If things go wrong, you could suffer big losses.

Don’t let the kids run the show

  • Your kids are begging you for the latest video game or the trendiest clothes, or new sporting equipment, You think about how well they’ve behaved lately and figure, why not? But your spouse is upset because it isn’t in the budget. Hello, here comes a big fight. To avoid this;
  • When you set up your budget, allow some money for the kids, and if it’s not planned for or there is not enough in the budget, then discuss it at the next budget meeting, and decide together if you are going to buy it or not.

IF you try everything and you just cannot get it to work.

If after all the efforts to have money conversations and to set up and stick to a budget your partner still

is spending more money than agreed.

If talking and trying to resolve budget issues just ends in arguments,

Then you need help.

Very often it helps to get someone else involved, an adviser or someone you trust, like a

  • a relationship counsellor, someone from your church
  • a financial advisor,
  • or a debt counsellor

So if you need help with money matters generally or debt and budgeting specifically

Contact us at RD Debt Counselling

Or visit us at 133 Newlands Ave Benoni or phone to make an appointment or discuss an issue

011 421 2918

Or for more info

www.rddebtcounselling.co.za

Banking and saving for children – teach children about money

Banking and saving for children – teach children about money

All of us want our children to do well and to grow up to be independent, money-wise adults, but how do we as parents or guardians teach children about money?

Teaching children about money takes a bit of planning and preparation. If you don’t do the planning and research you could end up like us.

A few years ago, when the children were little, we put a few hundred Rand a month into their accounts and after a year there was less in the account than what we had put in.

The fees were more than the interest. If you want to teach your child about banking and saving, you need to do a bit of homework.

If I, as a child of 10 years old, saw my money decrease in a year, that certainly wouldn’t encourage me to save anything. And this was in a children’s bank account from a major bank.

So what do you do?

It’s important for children to understand that all saving is not the same, and all banking is not the same. If in your research you can involve your children from the beginning, so much the better.

Talking to children about money is very important because children learn from you whether you talk to them or not, and rather they ask you the questions, than make their own ideas.

A friend was changing jobs and they were moving to a new area, so they were selling their house and things had been tough, so they had been saying to their kids, there’s no money for this when they asked and at some stage the 6-year-old turned around and said why have we got no money, you and daddy work very hard and we’re selling our house and there is never any money for the toys I want.

Because they never talked to their 6-year-old, thinking he was “too young to understand, he made up his own mind, and decided that they were poor, had no house and couldn’t buy toys.

Like everyone else, some people save naturally and others spend naturally, so work with your child’s personality, and find what motivates them.

When you start the conversation explain that there are really three types of saving:

Short term – money to be spent during the month for airtime, tuck at school and whatever else they use during the month.  This money needs to be immediately available. This is what we all call a current account

Medium term – buying something that they want, but can’t afford in one month, they have to save for it for a few months or a year or two, like an expensive video game or cricket bat or an expensive pair of jeans.  This money can be invested where it takes a bit longer to get it out like 32-day call account

Long term – this is saving over years and I always say to my kids, this is where you save for the deposit on your first decent car or maybe even a house.

What this means is that you need to find three different places to put money, because these three options are different and need different approaches to achieve a profitable result.

First, let’s look at the short term account, this is where you put the money to start with and then transfer to other accounts for the medium term and long term accounts.

Look at what your child needs to be able to do on the account:

Buying online – kids of today make online purchases, shoes, Takealot, Wish and many others. Not all bank cards allow you to do online purchases so check.

Banking online – they need to be able to do their banking online. A banking app would definitely be an advantage. They must be able to top up their airtime/data through this bank account, check if the account has online alerts where the child gets an SMS if the balance goes below a certain amount, or when they make a purchase, this is very important in the fraud-filled world we live in.

Stop orders – they need to be able to transfer some of the money to the medium and long-term accounts and if it goes off automatically when you can’t forget to transfer.

Bank costs – one needs to be careful of bank accounts that offer a bundle of services for a set fee – if your child doesn’t need all the services, then it’s a waste. Here check things like Admin fee, cash deposit and withdrawal fee, how much to withdraw from an ATM. Many accounts offer free transactions as long as there is a minimum of about 300 – 500 in the account.

The same bank as parents – it’s often easier to have the main account at the same bank as the parents

That’s the things to look for when you are opening the short-term account, after which you transfer, ideally by stop order to the medium term account.

Medium term: This where you save for some bigger items, the cricket bat or matric farewell outfit. You can link to a savings account and check here for high interest, low-cost savings accounts.

Another option is 32-day notice accounts, these are good because you need to plan and release the money before you purchase, so you can’t just buy on impulse.

Long-term: Here some of the best options are shares in their different forms.  Things like unit trusts are safer, but buying a share can be very satisfying and it connects the child to a company that they can see every day and you will find that they want to buy shares in companies that they know

EasyEquities is a share trading platform that is easy for the beginners and easy to use and the fees are straightforward and among the lowest in the industry.  Here you can also buy parts of shares because some shares are very expensive 1 share in Old Mutual costs about R3 900, so look at EasyEquities or if you have another platform then investigate that.

Start talking about money to your children, and get them to start getting into the habit of saving, it’s probably the best gift you can give your children.

Want to get your own finances back on track? Contact RD Debt Counselling today!

spring clean your finances

7 Tips to Spring-clean your finances

Since it’s officially spring, here are  7 top ways to spring-clean our finances. At least once a year, it is important to relook at all the aspects of our financial wellbeing.

Clean out your wallet

It’s the easiest place to start. Cleaning your wallet will get you motivated to get the process going and then move on to the other 6 things to do.

I know that my wallet has got far more paper and cards than bank notes which I carry with me all the time, my wallet has stretched from all the papers. Whether it’s old raffle tickets or loyalty cards.  Remove all the old till slips that you keep for tax puposes and never use. Cleaning out your wallet is the first place to get your finances and your wallet lighter.

Policies including your Will

Make sure your car, home, life, funeral and health insurance policies, top up policies, Credit life policies are updated to reflect any relevant life changes. Change of address, change of job, and check that your beneficiaries are current and correct.

Free Credit report

You can request a free credit report  every 12 months. Once you have your credit report, you can check for and correct any errors. This is especially important if you’re thinking of making any big purchases, like buying a new home. Try setting a calendar reminder so you remember to check your credit reports on a regular basis

While you may not think that you are in any financial trouble, it is possible that you have had a default or judgement against your name without your knowing it or that someone has fraudulently taken out credit in your name.

Bank account

Bank charges – check all your bank accounts and decide if you need them all.  Fees are charged on every account, so if you are not using it, and  it’s costing money just to keep it open, then close the account.

Another thing to remember is to get a detailed bank statement, get out your multicolored highlighters and mark all the debit orders one color and all the bank charges another colour and make sure you know what all of them are for.

There has been a lot of debit order fraud and these guys put a debit order under R100 on your account, if you have one of these approach your bank immediately.

And if the costs on your account are too high, go to your bank and find an account that is better suited to your needs.

Saving Automatically, put a stop order on your account for the amount you want to save and let it go off at the beginning of the month, we all know that waiting for the end of the month to save what is left is a disaster, there is very little or nothing left at the end of the month.

Review spending and do a budget

Do a budget – this is often a schlep for a lot of people, but even if you do it once a year, at least you have an idea of what you are spending your money on, and if there are some things that you can cut or get rid of, then do it and give more to your savings

Create an ICE folder

This has become very important on your cellphone, ICE is In Case Of Emergency, and the most important place is your cellphone because if you are in an accident, that’s the first thing the paramedics look, for who to call in the case of emergency

Now, you can do the same for your finances and policies, it doesn’t have to be fancy, list all your  policies, put the latest copy of your will in there, include debt and anything else that you pay every month.  Its tough enough for loved ones to deal with your death or illness, don’t make them dig through mountains of paper, or worse have to go through all the files on your computer

Debt

Catch up on late payments, short payments, this costs a lot of extra money, every time they phone you to remind you to pay it costs you money. Work out how you can pay off your debt quicker, the amount of interest you pay on debt is much higher than the interest you get on savings, pay off debt first

In short, these are our 7 tips for spring-cleaning your finances.

  1. Clean out your wallet
  2. Policies including your Will
  3. Free Credit report
  4. Bank account
  5. Review spending and do a budget
  6. Create an ICE folder
  7. Debt

If you discover that your finances are going backwards and you have too much debt and need help, then contact RD Debt Counselling and we will help you through the process and if you really need help, then we can look at debt counselling.

Russell Dickerson from RD Debt Counselling chats about RD Debt Counselling and how they can help you become debt free in the shortest possible time. Catch Russell on East Rand Stereo, every Saturday morning at 8:15.

registered debt counsellor

How to know if your debt counsellor is a registered debt counsellor

There are people out there advertising debt counselling and they are not registered debt counsellors. How do people know the difference and what can they do if they need debt counselling?

There are a number of companies that are offering voluntary debt review to clients. The main problem is that very often the client doesn’t know that they are applying for voluntary debt review. And these companies don’t make it clear that they are not registered debt counsellors.

What often happens is that someone decides that they need debt review and starts looking for a debt counsellor.  They get onto the Internet and they type in debt counsellors and a number of options come up.  They all look like debt counsellors and they all talk about debt counselling on their website and about reducing monthly payments.  Even though all of the results look legit, the problem is that some of them are not registered debt counsellors.

So, if you are looking for a debt counsellor, then look for a few  that you would like to phone. Before you make contact with them, go onto the NCR website,   the National Credit Regulators website, and search the name of the debt counsellor to see if they are registered.

If they are not there, then the red flags should go up.

Another option is to contact the Debt Counsellors Association of South Africa , DCASA. Russell Dickerson, owner of RD Debt Counselling, is on the national executive committee of DCASA, and they have a list of all their members on their website and all members of DCASA, are properly registered.  You can phone the DCASA office which is on the West Rand, and someone there will check for you if someone is a member. They can even recommend a debt counsellor in your area. Their phone number is 0861 43 22 72 and the website is dcasa.co.za.

What are the problems with going to an unregistered debt counsellor?

Voluntary debt counselling is not approved by the National Credit Regulator

  1. They have not done the debt counsellor training, so they are not registered
  2. They may be able to negotiate with your creditors, but you have no protection. They are not registered with the NCR, so if things go wrong you have no law to protect you.
  3. They do not go to court, and get the court order, so if your bank decides to change the amount they want to receive and start with legal action, you do not have a court order to protect you.

Here we are not talking about the complete fraudster who just wants your money and then runs, this guy is trying to operate outside the legal debt review process, many of them have connections to debt counsellors, so let’s say you start with the voluntary debt counselling, what they do is charge you exactly the same fees as if you were doing debt counselling. And then when something goes wrong, they quickly start you with proper debt counselling and you have to pay fees again, and the result is that you end up paying double fees for the same thing which you should have started in the first place and had all the protection.

What can people do if they discover that they are doing voluntary debt counselling and they thought they were doing proper debt counselling?

People are welcome to contact me, and I will check to make sure that we all have our facts right

If necessary we will switch them over to legal debt counselling and get a court order which protects them.

They should also be reported to the NCR so that they can have action taken against them to stop them from fooling other people into thinking they are doing debt counselling and then they discover too late when there is a problem, that they don’t have any legal protection.

If you are having any problems with this issue or any other debt counselling problems then call DCASA the Debt Counsellors Association of South Africa 0861 43 22 72 and let them help you.

Russell Dickerson

RD Debt Counselling

011 421 2918

www.rddebtcounselling.co.za

Retirement and life expectancy – what you need to know

Retirement and life expectancy – what you need to know

Because of medicine getting better and better and many people living longer, the plans we all made when we were 25 or 30, like taking out a retirement annuity, or you had a work pension or provident fund, maybe you bought some unit trusts, have changed slightly.

Fast forward a couple of years and now there isn’t enough money when these plans pay out because we are all on average now living longer.

According to USA today, if you are 65 now, then you are expected to live on average for another 18 years if you are a man and another 21 years if you are a woman.

So that’s 83 for men and 86 for a woman.  Now the funny thing about averages is that 50% will live longer and 50% will live shorter and how do you decide which one you are?  In this article, we want to get you to think about retirement and start doing some sums.

Many of us changed jobs and used our provident funds, sold our unit trusts when we needed a new car for our wife, and now we are looking at what we thought would be enough for a few years after we retired and now it’s a lot of years we have to think about after we retire.

But there is good news for those who can control it and that is that because of the advances in medicine and the fact that we are all so much healthier, on average again, that we can all work that much longer if we need to.  Now I know that some companies force people to retire at a certain age, but I think that that should be looked at, but if you are going to be forced to retire at 60 or 65 , then a few years before you retire, start looking at other ways to make income, if you are going to get a payout when you retire, maybe it’s time to start a business, or look at some other sort of jobs that you can leave your pension or provident untouched and maybe even contribute more for  few years.  The days that people retire happily at 65 and have been working at a company for 40 years are long gone, and very few people can sit back at 65 and say I have enough to last forever

Don’t forget Assets like a house, I believe that everyone should try to have a paid house by the time you retire, so if you have a bond then part of your retirement planning is to make sure that your house bond is paid off by the time you retire.

The same with debt, you cannot go into retirement with debt, so if you are in a position where you are not controlling your debt, then speak to a debt counsellor about getting your debt finished before your retirement age.  I have had a lot of people who say to me I have to get this debt finished before I retire in 4 years or whatever time.  And that is the right thing to do, get your debt out of your life before you retire.

Another very important thing to consider is if you are still married and both of you are getting old. according to the Society of actuaries For couples who are 65 today, there’s a 45% chance that a wife outlives her husband by five years and a 20% chance by 15 years,

Will there be enough money for whoever lives longer, normally the wife?  Sadly for us men, another thing to do is to make sure that you have enough life insurance to cover each other.  Take out as much life insurance as you can afford so that when one of you dies, the other one won’t have to struggle

So that’s a lot to think about.

Have I got enough money invested, to last for about 20 years after I retire? Can I work for longer, and have I made a plan to work longer? Is my house going to be paid before I retire? Will all my debt be finished when I retire?

If you need to speak to someone, especially if you want to get your debt under control, contact RD Debt Counselling, or visit our offices at 133 Newlands Ave. You can also give us a call at 011 421 2918.

Everything you need to know about Credit Records and Reports

Everything you need to know about Credit Records and Reports

Not many things in life are completely free of charge, but you’re entitled to a free up-to-date credit report every year and this is your right in terms of the National Credit Act.

Knowing your credit record and keeping it healthy is particularly important when applying for big items such as a home loan, or a vehicle or business financing – because credit providers check your credit and payment behaviour before they approve your loan.

What is the purpose of credit bureaus and credit reports?

Credit bureaus were created for the Credit Industry and the information is provided by companies that offer credit such as banks, retailers, utility and insurance companies

They also contain info from the public domain, in other words the South African courts, for info on sequestrations, Admin Orders, Judgements, garnishees and debt review.

There is nothing on criminal judgements on the credit bureau.

Important to remember here.  The credit bureau is a thing that accepts information and analyses it, and it is only as good as the information supplied, so the credit bureau generally is not the problem, it is the credit provider or doctor or lawyer who supplies the wrong info, or doesn’t supply any info at all.

It’s like the famous saying about computers.  Garbage in garbage out, so don’t blame the computer if it is given the wrong info.

What makes up a credit report?

The three main parts of a credit report are :

  1. Personal Info – Where you worked, your telephone numbers, where you lived, and all the Court information, like judgements, debt review status, administration orders, garnishees
  2. Credit Commitments, here are all your credit agreements, how much is outstanding, how much the monthly payment is, when the last payment was and if there are any arrears on the account
  3. Payment profile is how you have been paying, and its very important to know here that the credit bureaus use payment information for the last 6 years, and although you might see payments for only about the last year on the profile, when your credit score is worked out they look at information for the last 6 years, so if you have been paying beautifully for the last 2 years, but things were a bit sketchy 3 years ago when you were struggling, this will reflect on your credit report and your credit score

Something interesting that appears on the credit report and which causes a lot of excitement is under Default Information, sometimes here you will find

Account status – written off

And I have had it many times where a client comes flying into my office and says, stop paying my credit card the bank has written off the amount look here it says so on my credit report

Has the account been written off?

No, unfortunately not, this normally just means that the account has been moved to the collections space, and removed from the accounting area where the regular accounts sit.

It’s an unfortunate choice of words, but if your credit report says written off, then you still owe the money, and now someone is going to start phoning you a few times a day to collect the money.

Where does someone get their free credit report from?

The NCA entitles you to one free credit record check a year, with each bureau. Here are the contact details of four major credit bureaus:

If you have an adverse listing on your credit report – what can you do about it?

If you disagree with a listing you can lodge a dispute with the credit bureau. They’re going to require you to provide proof, for instance, a receipt for the amount paid, or a paid-up letter from the bank, or a statement on the account showing a different balance to what they have.

Sometimes it’s just a mistake that needs to be fixed, and sometimes if there is still an outstanding amount then you will have to finish paying the account before they will remove it.  Often people will say that a judgment is paid up and we contact the lawyers who got the judgment and they say, no there is still R2000 or whatever left on the account.  At that stage, you can dispute it with the lawyer, and ask for statements of account and check them if you think that they are wrong, or you pay the amount and tell them to remove it from the credit bureau.

If, after 20 days, the adverse listing remains, you may approach the Credit Ombud for help. The credit ombud will get all the information and determine if you or the party you are arguing with is correct and make an order which has to be followed.

Call 0861 662 837, e-mail Ombud@creditombud.org.za or sending an SMS to 44786 and they will call you back.

Here is some interesting information – Less than 5% of South Africans regularly check their credit records…

And here is some more good news – 70% of those who lodge a complaint with the credit bureaus about an unjustified listing have them removed.

If you are turned down when you apply for credit what can you do?

The first thing that you do is ask them why

Because credit providers such as banks, cell phone companies and retail outlets have the right to reject a credit application, they have to offer reasons as to why.

They are legally obliged to tell you the reasons if you ask. In most cases, they won’t tell you if you don’t ask.

How is a credit score calculated?

Our credit information, along with employment history, income, affordability assessments and the type of credit we apply for, is summarised on our credit profiles.

Each credit bureau calculates a credit score – a three-digit number – for every credit-active consumer, using a complex formula that evaluates how you pay your bills, how much debt you carry and how all of that compares to other credit-active consumers.

In effect, it reveals – in a single number – what your credit report says about the management of your existing credit.

What you do have to realize is that all credit bureaus use their own method of calculating a credit score, so you can’t compare a credit score from Compuscan with a credit report from Experian.

Key factors which affect your credit score:

  • Account payment history: how you manage your accounts and whether or not you pay the entire installment amount on time.
  • Debt level: how much you owe and how much of your available credit you’re using.
  • Negative information: publicly available information in your credit record, such as bankruptcies and judgments, indicating you did not honour a particular debt obligation.
  • Length of credit history: how long each of your accounts has been open.
  • Account application and enquiry activity: how many account applications you submitted within a short period of time, and how many new accounts you opened.

My credit score is lower than expected.  Why could this be?

  • A credit history of fewer than 6 years, which is the time frame used to calculate your total credit score.
  • Missed or late payments over the last 6 years.
  • Holding very few credit accounts means there will be less credit history available on your profile.
  • Court judgments or record of insolvency.
  • Having a lot of unused credit available could lead to a large balance of debt if you decided to use it all at once.
  • Balances on your accounts that are very close to the credit limit indicate that you rely on credit to get through each month.

Can someone have a credit score if they don’t have debt?

Unfortunately, you won’t have a credit score if you don’t have any debt because your credit score is calculated and based on your credit habits. This doesn’t mean your financial health is bad, there’s just simply not enough data to give you a credit score.

This can be bad news if you’re looking for a home loan though, so your first steps will be to apply for financial products where you can start building a credit record.

These can include:

  • Credit card
  • Vehicle finance
  • Phone contract
  • Clothing accounts

This is a little bit crazy, you don’t need debt, and you manage your life without it, but before you can buy a house you need to open a credit card and a clothing account and run it for quite a while.

This has been recognized and there is a move at the moment to change this, with so much information out there, and computers which are powerful enough to search and analyse tons of info, they use things like cell phone accounts, cash purchases , loyalty programs, utility accounts and a lot of other info which doesn’t appears on a credit report and analyse that info, see how you have paid and what the type of thing is that you spend money on to determine if you are a risk or not for a home loan.  Unfortunately, this is not generally available right now, but with the speed of technology at present I would expect to see it in the next few years.

I have heard that the more enquiries on a credit account, the worse the score, so if I draw a credit report regularly this will make my score worse, is that true?

Accessing your own credit report doesn’t harm your score. But a lot of enquiries from Credit Providers when you apply for credit will hurt your score.

The credit bureaus separate what they call hard and soft enquiries, soft enquiries are when you draw for information purposes or someone you are going to work for draws your credit report.

Hard enquiries are when the report is drawn to apply for credit, so drawing your own report will not harm your credit score.

So if you are thinking of buying a major item like a house or car soon, then check your credit record. If its fine wonderful, if it’s not then either the info there is wrong and you can dispute it, or you need to do something to fix it.

If you need help with the process, or you need help with your debt or have any questions about debt, contact RD Debt Counselling on 011 421 2918.

credit reports

Everything you need to know about credit reports

Not many things in life are completely free of charge, but you’re entitled to a free up-to-date credit report every year and this is your right in terms of the National Credit Act.

Knowing your credit record and keeping it healthy is particularly important when applying for big items such as a home loan, or a vehicle or business financing – because credit providers check your credit and payment behavior before they approve your loan.

What is the purpose of credit bureaus and credit reports

Credit bureaus were created for the Credit Industry and the information is provided by companies that offer credit such as banks, retailers, utility and insurance companies

They also contain info from the public domain, in other words the South African courts, for info on sequestrations, Admin Orders, Judgements, garnishees and debt review.

There is nothing on criminal judgements on the credit bureau.

Important to remember here:  The credit bureau is a thing that accepts information and analyses it, and it is only as good as the information supplied, so the credit bureau generally is not the problem, it is the credit provider or doctor or lawyer who supplies the wrong info, or doesn’t supply any info at all.

It’s like the famous saying about computers.  Garbage in garbage out, so don’t blame the computer if it is given the wrong info.

What makes up a credit report?

The three main parts of a credit report are:

  1. Personal Info – Where you worked, your telephone numbers, where you lived, and all the Court information, like judgements, debt review staus, administration orders, garnishees
  2. Credit Commitments, here are all your credit agreements, how much is outstanding, how much the monthly payment is, when the last payment was and if there are any arrears on the account
  3. Payment profile is how you have been paying, and its very important to know here that the credit bureaus use payment information for the last 6 years, and although you might see payments for only about the last year on the profile, when your credit score is worked out they look at information for the last 6 years, so if you have been paying beautifully for the last 2 years, but things were a bit sketchy 3 years ago when you were struggling, this will reflect on your credit report and your credit score

Something interesting that appears on the credit report and which causes a lot of excitement is under Default Information, sometimes here you will find

Account status – written off

And I have had it many times where a client comes flying into my office and says, stop paying my credit card the bank has written off the amount look here it says so on my credit report

Has the account been written off?

NO unfortunately not, this normally just means that the account has been moved to the collections space, and removed from the accounting area where the regular accounts sit.

It’s an unfortunate choice of words, but if your credit report says written off, then you still owe the money, and now someone is going to start phoning you a few times a day to collect the money.

Where does someone get their free credit report from?

The NCA entitles you to one free credit record check a year, with each bureau. Here are the contact details of four major credit bureaus:

If you have an adverse listing on your credit report – what can you do about it?

If you disagree with a listing you can lodge a dispute with the credit bureau. They’ re going to require you to provide proof, for instance a receipt for the amount paid, or a paid up letter from the bank, or a statement on the account showing a different balance to what they have.

Sometimes it’s just a mistake that needs to be fixed, and sometimes if there is still an outstanding amount then you will have to finish paying the account before they will remove it.  Often people will say that a judgment is paid up and we contact the lawyers who got the judgment and they say, no there is still R2000 or whatever left on the account.  At that stage you can dispute it with the lawyer, and ask for statements of account and check them if you think that they are wrong, or you pay the amount and tell them to remove it from the credit bureau.

If, after 20 days, the adverse listing remains, you may approach the Credit Ombud for help. The credit ombud will get all the information and determine if you or the party you are arguing with is correct and make an order which has to be followed.

Call 0861 662 837, e-mail Ombud@creditombud.org.za or sending an SMS to 44786 and they will call you back.

Here is some interesting information – Less than 5% of South Africans regularly check their credit records…

And here is some more good news – 70% of those who lodge a complaint with the credit bureaus about an unjustified listing have them removed.

If you are turned down when you apply for credit what can you do?

The first thing that you do is ask them why

Because credit providers such as banks, cell phone companies and retail outlets have the right to reject a credit application, they have to offer reasons as to why.

They are legally obliged to tell you the reasons if you ask. In most cases they won’t tell you if you don’t ask.

How is a credit score calculated?

Our credit information, along with employment history, income, affordability assessments and the type of credit we apply for, is summarised on our credit profiles.

Each credit bureau calculates a credit score – a three-digit number – for every credit active consumer, using a complex formula that evaluates how you pay your bills, how much debt you carry and how all of that compares to other credit active consumers.

In effect, it reveals – in a single number – what your credit report says about your management of your existing credit.

What you do have to realize is that all credit bureaus use their own method of calculating a credit score, so you can’t compare a credit score from Compuscan with e-credit report from Experian.

Key factors which affect you credit score:

  • Account payment history: how you manage your accounts and whether or not you pay the entire installment amount on time.
  • Debt level: how much you owe and how much of your available credit you’re using.
  • Negative information: publicly available information in your credit record, such as bankruptcies and judgments, indicating you did not honour a particular debt obligation.
  • Length of credit history: how long each of your accounts has been open.
  • Account application and enquiry activity: how many account applications you submitted within a short period of time, and how many new accounts you opened.

My credit score is lower than expected.  Why could this be?

  • A credit history of fewer than 6 years, which is the time frame used to calculate your total credit score.
  • Missed or late payments over the last 6 years.
  • Holding very few credit accounts means there will be less credit history available on your profile.
  • Court judgments or record of insolvency.
  • Having a lot of unused credit available could lead to a large balance of debt if you decided to use it all at once.
  • Balances on your accounts that are very close to the credit limit indicate that you rely on credit to get through each month.

Can someone have a credit score if they don’t have debt?

Unfortunately you won’t have a credit score if you don’t have any debt because your credit score is calculated and based on your credit habits. This doesn’t mean your financial health is bad, there’s just simply not enough data to give you a credit score.

This can be bad news if you’re looking for a home loan though, so your first steps will be to apply for financial products where you can start building a credit record.

These can include:

  • Credit card
  • Vehicle finance
  • Phone contract
  • Clothing accounts

This is a little bit crazy, you don’t need debt, and you manage your life without it, but before you can buy a house you need to open a credit card and a clothing account and run it for quite a while.

This has been recognized and there is a move at the moment to change this, with so much information out there, and computers which are powerful enough to search and analyse tons of info, they use things like cell phone accounts, cash purchases , loyalty programs, utility accounts and a lot of other info which doesn’t appears on a credit report and analyse that info, see how you have paid and what the type of thing is that you spend money on to determine if you are a risk or not for a homeloan.  Unfortunately this is not generally available right now, but with the speed of technology at present I would expect to see it in the next few years.

I have heard that the more enquiries on a credit account, the worse the score. If I draw a credit report regularly, will that make my score worse?

Accessing your own credit report doesn’t harm your score. But a lot of enquiries from Credit Providers when you apply for credit will hurt your score.

The credit bureaus separate what they call hard and soft enquiries, soft enquiries are when you draw for information purposes or someone you are going to work for draws your credit report.

Hard enquiries are when the report is drawn to apply for credit, so drawing your own report will not harm your credit score.

So if you are thinking of buying a major item like a house or car soon, then check your credit record. If its fine wonderful, if its not then either the info there is wrong and you can dispute it, or you need to do something to fix it.

If you need help with the process, or you need help with your debt or have any questions about debt, contact RD Debt Counselling at 011 421 2918.