Spring cleaning your financial house
Spring has sprung! The excitement of a new season that brings sunshine is in the air. While our summer bodies may be somewhat ready, we are certainly putting those big jackets away and preparing to do some spring cleaning. As we find ourselves being in the spirit of cleaning, let us not neglect to spring clean our financial houses. Just like how you would clean your home, by moving around furniture, some may even replace a few things in their homes, you use the same principle to get your financial house in order.
The following steps will assist in ensuring that you get to all the corners of your finances and will be prepared for the future:
1. Step no.1 – Clearance
Before you can start the cleaning process, you need to move out all the big furniture and clear up space. This way you can know that the cleaning will be done properly.
You need to remove the big furniture - obstructions, that will create space where you can effectively ensure that your financial house is in order. Start by avoiding possible stumbling blocks and ensure that you have a will in place. In the unfortunate event of your death, the last thing that you want is to leave your family in distress when it comes to your estate. A will assures you that your estate is divided according to your wishes. 12-16 September 2022 is National Wills week in South Africa. The purpose of the initiative is to encourage more South Africans to get their house in order by having a will done. To find out more about National Wills week, you may visit the Law Society of South Africa’s website at www.lssa.org.za. During National Wills week, attorneys participate in an initiative where a basic will may be drafted for you at no cost.
2. Step no.2 - Decluttering
Decluttering simply means making something more pleasant and useful. Start by evaluating your financial house. What can be removed or repurposed, and what is required? Paying multiple insurance policies might be costing you more, perhaps you should consider getting one insurance policy to suit all of your needs. Utilize what you can and make the most of it. Debt does not die with you, therefore if you have debt, you can consider having credit life insurance in place or some form of credit cover. Credit life insurance is cover you take out when you want to ensure that in the event of your death, disability, terminal illness, unemployment, or other events that may impair your ability to earn an income, your monthly debt repayments are covered. There are conditions to credit life insurance and you should make sure that you do understand the credit insurance policy upon commencement. If you pass away and do not have credit life cover or any other cover in place, your debts remain payable. Bring your family up to date and make sure they are familiar with your accounts and the credit life insurance you pay so that in the event of your death, a claim can be submitted in time. You do not want your loved ones to inherit your debt instead of your wealth.
3. Step no.3 - Cleaning equipment
You cannot spring clean without your equipment. Broom, duster, bucket, mop, etc., and don’t forget your cleaning products/chemicals. In this case, where we are referring to your financial house, the equipment and products needed will be financial professionals, regulatory bodies, associations, and ombud offices such as the Credit Ombud and the MFSA that you can count on; to provide guidance, advice, and assistance to you as a consumer. Many consumers have been victims of fraud and have been scammed. This happens often when you do not know where to seek help or do not know whom to approach when you need to apply for credit at a legal and registered credit provider. MFSA is a representative body representing over 1300 registered microfinance credit provider offices in South Africa. As the trusted voice of responsible Microfinanciers, they want to emphasize how crucial it is for consumers to approach credit providers who are registered with the National Credit Regulator (NCR) when applying for credit. Consumers should confirm whether the credit provider is registered with the National Credit Regulator (NCR) via their website www.ncr.org.za by navigating to the registrant’s section. MFSA Members have a national presence with outlets situated in rural, semi-urban, and urban areas. Their members service from and offer credit either via an online platform or from a physical store, located in shopping centers, or smaller retail centers for example. Whenever you require peace of mind about a credit provider or legal conduct in respect of the credit being offered to you, don’t hesitate to contact the MFSA via their website www.mfsa.net.
Should you need to dispute any non-bank credit agreement matter, the Credit Ombud is there to help, even when you are incorrectly or unfairly listed at the credit bureaux. For the Credit Ombud to intervene in your matter, you first need to start by raising your dispute with the credit provider. You would need to do the same with the credit bureau if there is incorrect information reflected on your credit report. You will be provided with a dispute reference number. Then you give them 20 working days to resolve your dispute. If they do not respond to you within 20 working days or you are not happy with the outcome of their investigation, you may contact the office of the Credit Ombud, for assistance with your complaint.
4. Step no. 4 - Organizing
Once you have cleaned your house, then you put everything back to where it was, or you rearrange your furniture to give your home that ‘new’ look. In terms of your financial house, this step would be for you to create a filing system for all your financial documents. If you have not created a filing system for all your accounts and insurance policies, then now is the time to do so. Make a list of all your debts including the interest payable and using this you can check your balances from the prior month. You will soon be aware if your balance outstanding is decreasing or in fact, increasing. Use the opportunity to draw up a budget so that you can keep track of your spending and savings. This way, you can cut out unnecessary spending and avoid taking on additional debt. Paying a little extra towards your debts, even if it is just a few rands over and above your required installments, can reduce the repayment terms and interest. Organizing your finances helps you to stay on top of your game. How? You ask. Well, each time you sign a new credit or service agreement, file the agreements and statements you receive. Should there be any discrepancies, you will pick it up quickly and deal with the matter sooner rather than later. And because you are now organized and have all your ‘cleaning equipment’, you will know where to go to get the help you need to resolve your matter.
5. Step no. 5 – Consistent cleaning
Spring cleaning should not be limited to the onset of the season. By cleaning up your home consistently, you will reap the benefit of a healthy and clean home throughout the seasons. So too, should be your priority with debt obligations, reviewing your credit report and monthly budget. Pay your accounts on time each month, without short-paying or missing payments. Late or missed payments will impact your ability to apply for credit as adverse information relating to your late or non-payments will reflect on your credit report. Adverse information on your credit report will determine if you can be extended credit and the interest rate payable. This is important when credit providers conduct an assessment of your affordability when in the process of deciding to grant you credit to buy a home, a car, a personal loan, or other credit. Remember that you are entitled to a free credit report every twelve months. Request this from the credit bureaux to manage your finances.
When you are constantly cleaning up your financial house, you may find room for improvement. Whether it be regularly accessing your credit report, or revisiting your monthly budget, there will always be something more that is required. We are continuously building and renewing our financial houses, exploring different investments, retirement annuities, purchasing goods, and obtaining assets. As long as you are committed to having a healthy and clean home, you will not find your house in ruins or face destruction.
Consumers can contact the office of the Credit Ombud for FREE assistance if they experience any issues relating to credit agreements with non-bank credit providers such as clothing and furniture retailers as well as microfinanciers, fraudulent listings, emolument attachment orders (“garnishee orders”) or general complaints about their credit bureaux listings. The office can be contacted on 0861 66 28 37; on the website www.creditombud.org.za; email us at ombud@creditombud.org.za or send a SMS to 44786 and we will call you.