A home loan is arguably the most important debt asset if you own a home and unfortunately, it is not something that can be skipped or missed.
Staying on top of your monthly instalments should be your biggest priority, but this is not always as easy as it sounds.
The economy takes a knock every now and then and this affects all of us. You might find that you have no breathing room amongst the other debt that keeps on piling up.
Here is how to keep up with your bond repayments even when it feels like you might be drowning:
Income > expenses
The most important thing to remember is that your income needs to exceed your expenses.
Sounds simple, but it definitely isn’t!
Print out a bank statement and have a look at all the expenses for each month and decide where you can cut: it’s useless having cable TV if you are not at home to enjoy it. And while you’re at it, you could even opt for a cheaper bank account to save on banking fees.
Tight economies don’t last forever, so the sacrifices you make will probably not be permanent. It is important to save every cent when the going gets tough.
Insurance and phone bills
Insurance is one place where you can definitely cut costs.
Spend time to gather insurance quotes from companies & opt for basic coverage without the added frills!
Similarly, with cell phone bills, you should consider opting for a cheaper phone package or data package. You can save a lot every month by reducing the type of phone you have and how often you speak on your phone.
Rather send SMS’s or WhatsApp messages if it is unimportant and save phone calls for emergencies. It works out a lot cheaper.
Other expenses
Have a look at your water and electricity consumption. Here you can also save a lot by simply turning off the geyser during the day or switching to energy-saving globes.
You can also pause your retirement annuities for a short period of time until you are back on your feet. Reducing these monthly expenses should never be a permanent solution and as soon as you are in a position to reinstate them, do so immediately.
Pausing or reducing them should just give you necessary breathing space until you can afford the full amount again.
Extra earnings
If you are really struggling to stay on top of your expenses, consider a way of earning extra cash during the month.
Again, this is not a long-term solution either (although it can become one if you can manage your time well), but it can relieve immediate pressure until you can afford the expenses with your primary income again.
Perhaps you ought to consider working overtime if your company allows it or cash in leave days if you have that option. Another way to earn extra cash is to rent out a room if you have a spare one.
Bond payment
It can be very tempting to skip or miss out on a bond repayment completely, but this is definitely not advisable.
Even partial payments help to show good faith and interest will accumulate slowly, helping you to catch up!
Partial payment, however, is not a long-term solution either. If you are struggling to cope, speak to your bank manager. They will be able to assist you financially as repossession really is the last resort. Early communication is key!
There are a number of ways in which a bank can help you protect your home when facing financial difficulty but this only happens if you are proactive and do your best to prevent potential downfall.
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