Current economic situations ask for better planning.

We have seen a big jump in the cost of debt. The biggest impact for most is the increase in the repayments on a bond.

What to do?

Everyone’s situations are different but let’s look at a few basic options.

The repo rate has been on the rise from the beginning of the year. We have seen a big increase in the amount we have to pay for our debt, and this has a big impact on our households. Normally, the biggest payment will be towards a primary residence, but we have seen so many clients that had to make use of personal loans and/or credit cards.

For your Home Loan.

• Banks can review your interest rate on your home every 6 months. This rate is normally calculated by your personal financial position. If the bank believe that you are a high risk, they will charge a higher interest rate. If your financial position has changed for the good, the bank will adjust your rate and the payments can go down.

Credit card and/or personal loan:

• Normally the interest on this debt is very high. Look at your current portfolio and see if any funds are available to transfer into these types of debt. It does not really make sense to invest and earn interest of 12% if the interest that you pay on this debt are between 18 and 25%. The more you save on your monthly credit card payments, the more money can be allocated towards you bond that will reduce your payments or even the term.

Short-term contracts:

• Ask the insurance company to make sure you are still paying the best possible premium. Make sure the important things are on the contract and that the car that you sold 3 years ago has been removed.

Other account:

I have seen so many people in financial crises, but they will still pay big monthly amounts toward cell phones, TV channels and cars they do not need. Let’s look at what is necessary and start to focus on reducing our debt.

By making small changes in our spending habits, we will be able to do more with our money going forward