FNB says middle-income consumers spend up to 80% of monthly salary in 5 days
The quantification of the money challenge faced by most South Africans has caused a stir. Some take consolidation loans in a bid to deal with their high indebtedness. Having worked with people and their money for many years, my advice to anyone is that keep away from a consolidation loan because all it does is that it lumps up your many small debts into one big debt. Once you have a consolidation loan, it is even more difficult to get out of debt. Below are the reasons I don’t encourage anyone to take a consolidation loan.
- You will pay initiation fees on the loan
- You will also be sold credit assurance
- A consolidation loan is an unsecured loan so it comes with a high rate of interest
- Due to lack of knowledge of finance, many have consolidated interest free clothing accounts into high interest consolidation loans
My advice to anyone with a lot of debt is kill those debts one by one, starting with the smallest debt first. You stand a much higher chance of getting out of the debt quicker that way. Lumping up your debts into one big debt is not going to help you. For more tips on how to kill your debts, read a copy of the book From Debt to Riches: Steps to Financial Success or even better, invite me to speak to your staff members, Ts & Cs apply.