As soon as the 1st of December hit, there was already a festive buzz in the air. The long-awaited festive
season has arrived. While we are reeling from the after effects of the pandemic, our financial woes
have not dissipated. Can we really say that we have recovered when the cost of living has just increased
for many consumers? Or are we just getting by, living month-to-month with the hope that things will
get better?
Imagine a festive season where you spend your money with no worries about money. Where your only
concern is ensuring that the braai stand is ready for all the braai’s you will be hosting for family and
friends. A festive season when you need to remember what’s on your favourite aunt’s wish list so that
you buy her the correct gift. Where the ‘happy holidays’ are genuinely happy and cheerful. It may seem
far-fetched, wishful thinking, and too optimistic, but it is indeed possible.
We have been sombre for too long now and it is time to work on getting out of the slump and into the
world of the living where we can live out our dreams and achieve our aspirations without the guilt or
worry of debt piling up. You need not wonder how a life without debt can be or any financial woes
because it is all about how well you plan towards your financial freedom. The Credit Ombud and
MicroFinance South Africa want to help the many consumers who want to be set free from the chains
of bad debt. To the consumers who are over-indebted, who want to get out of their current debt, and
to the ones who want financial freedom, we are referring to you. Change the narrative of a broke
January and transition into a debt-free life.
Freedom from bad debt means that you only use debt for its intended purpose and that is to better
your life. Understanding the purpose of debt/credit will help you in the future should you consider
taking on any debt. Here is how you can start your personal journey to being debt free:
Start by assessing where you are and where you want to be. Set realistic goals for yourself.
1. Assessment and Preparation: Assess your financial situation, including income, expenses, and debts
owed – you can gather the information from your creditor provider/s or by accessing your credit report
– and thereafter draw up your Budget. Your Budget will assist you in preparing for the negotiation with
your credit provider/s.
2. Negotiation: Contact your credit provider/s to negotiate and reach an agreement on a different
repayment plan, a lower interest rate, or an extended repayment term that is feasible for you.
3. Agreement: If you and the credit provider agree to the new terms, a formal agreement will be
established, that includes the details of the terms of the repayment plan and any changes to the
original debt agreements.
Make sure that you understand your responsibility with the different repayment plan and the possible
agreement.
4. Implementation and Monitoring: Once the agreement is in place, you start making payments
according to the agreed-upon terms and monitor the process to ensure that you adhere to the
agreement.
5. The process: During this time, it is important to take note of your responsibilities in order to reach
your goals in terms of financial freedom.
• Do not apply for more credit if you cannot afford it – Remember your assessment and the goals
set in Step 1.
• Once you have entered into the new credit agreement, it is your responsibility to ensure that the
monthly repayments, as agreed upon, are debited to the credit provider as per the agreed
payment method.
• Keep in mind that there are consequences of non-payment – If you want to reach your goals and
avoid financial stress, you must remain disciplined.
6. Completion: Upon successful completion of the repayment plan, the debts will be settled. You
should consider developing new financial habits to maintain financial freedom.
• Review your budget consistently.
• Check your credit report regularly.
• Before applying for more credit, plan and assess your financial position properly.
• If you get access to more credit, use it wisely.
• Do not put yourself under pressure to obtain, for example, a new car, practice patience and wait
until you can afford it.
Ideally, your bonus should go towards you, but that narrative changed due to debt that consumers find
themselves paying towards to become debt-free. As great as it is that we are being responsible, but
don’t forget that it is important to live a balanced life. Being debt-free is the ultimate lifestyle!
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.
