CHECKLIST 1: BEFORE TAKING OUT A LOAN
- What is the security required for the loan you are interested in?
- What are the repayment conditions? How much do you have to pay and how often?
- Is the loan variable or fixed interest?
- Are there any conditions affecting additional payments or paying out the loan early?
- How long is the loan term?
- What is the total amount you will pay back on the loan?
- Are there any additional fees, such as account keeping or maintenance fees, that you will need to pay above the repayment fees?
- Do you need mortgage, income or disability insurance?
- What are your options if you experience short-term repayment difficulties?
- What are the consequences if you can’t repay your loan at all?
- Is your contract covered by the Consumer Credit Code?
CHECKLIST 2: STARTING A DEBT-REDUCING STRATEGY
Once you are serious about your finances, use this handy checklist to get yourself started on the road to financial wellbeing.
- Make a serious commitment to look after your finances – it is the only way you can become debt free.
- Stop getting yourself into more debt. Stop using credit. If you cannot pay for it in cash, you cannot afford it – so do not buy it.
- Stop using credit cards! If you absolutely must have one, get one with a small limit and low interest rates. Pay off the entire amount every month and use it only for specific purposes.
- Track your expenses for a month and stick to a budget. At the end of the month you can reassess and make changes as necessary.
- With mortgage expenses taking about 30% of your income, you need to set aside another 15–25% to manage your debts. You can make adjustments on your expenditure, but not at the expense of your savings (10% of income). Any additional savings you manage to make can be put towards paying off your debts faster.
- Determine a repayment program in relation to your lender and cut down on large or repetitive expenses that do not represent value for money.
- Pay off your credit cards first, as they attract the most interest. An alternative is to pay off your smallest debt first and use the combined repayments to attack larger debts.