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The Truth About Debt Counselling

Learn to manage your debt.

Eamonn Ryan

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Thanks to the recent economic upheaval, people are more familiar with debt than they would like to be. Unfortunately, they are also applying for debt counselling for all the wrong reasons – thinking they can avoid their debts when they really need to confront them with lifestyle changes.

Debt counselling is not a ‘hiding place’

The debt counselling system is becoming bogged down by the weight of a huge number of applications, currently more than 7 000 a month, many of which are from people who should not be applying for debt counselling in the first place. According to Stats SA, the number of people who applied for debt counselling rocketed from 36 246 in November 2008 to 132 291 by November 2009.

Who should use debt counselling?

Of the flood of applications, a percentage is from people desperate for ways to escape repaying their debts and therefore opting to hide behind debt counselling. According to Stats SA, applicants are typically people who on average earn about R10 000 a month, have ten different credit accounts across various credit providers and are being threatened with imminent legal action.

That applies to a lot of us in the current economic climate, but sensible people do not seek debt counselling – it has unpleasant consequences, especially for the businessman and entrepreneur. Everything that can be done through debt counselling (except the temporary protection from creditors) can also be achieved in direct negotiation with those creditors.

This may involve repaying debts over a longer period of time, or such similar solutions aimed at stretching your cash flow, but typically means implementing the lifestyle changes necessary to achieve solvency. Gabriel Davel, CEO of the National Credit Regulator, says that this deluge of unnecessary claims is creating a bottleneck in the system and inhibiting the timeous debt counselling of genuine applicants.

“Debt counselling is meant to assist over-indebted consumers who can no longer afford to pay their monthly financial commitments, not for consumers who choose not to repay their debts.

“When certain applicants fail to fulfill their agreements with credit providers, it bogs down the system but more importantly may result in those consumers losing their assets through repossession.”

Righting the misconceptions about debt counselling

Where the misunderstanding has arisen is the protection applicants enjoy from creditors once they apply for debt counselling. Many consumers mistakenly believe this protection is permanent. Davel points out that it is only for 60 days – time for applicants to renegotiate all their credit facilities – after which the applicant is again exposed to the possibility of legal action and repossession. “When under debt counselling, you are required to pay the monthly installments agreed with your debt counselor. If you fail to make these payments, you forfeit the protection afforded you by the National Credit Act, and the credit provider has the right to take legal action against you, even when under debt counselling,” says Davel.

“It must be made very clear to consumers: even if people apply for debt counselling, they still have to repay their debts or they will certainly lose their cars or even their houses, depending entirely on their debt repayment record.”

When should you consider debt counselling?

Davel explains that debt counselling should be the very last resort for consumers as it comes with some medium-term drawbacks, such as being credit blacklisted for five years, thereby damaging one’s ability to apply for further credit or even to apply for certain jobs.

He advises consumers: “Start by letting your creditors know you are experiencing difficulty. You may be able to achieve the same results without debt counselling and its negative implications.”

Furthermore, Davel outlines what you need to know about debt counselling:

  • If you are married in community of property, your spouse will also come under review
  • Your name will be flagged at the credit bureau so you cannot incur additional debt
  • There are significant costs, both of an upfront and regular monthly nature, made to the debt counsellor
  • Once the agreement is in place you have to meticulously stick to the terms of repayment or the credit provider has the right to terminate the agreement and proceed to legal action to repossess assets.

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

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Personal Finance

7 Steps To Achieve Financial Freedom

Achieving financial freedom doesn’t necessarily mean becoming filthy rich – not that that hurts.

Brian Tracy

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In this video, Entrepreneur Network partner Brian Tracy explains the seven steps you need to take to achieve financial freedom. Now, financial freedom doesn’t mean becoming filthy rich – lottery winners go bankrupt all the time. Instead, financial freedom is about becoming disciplined and using your money in a way that ensures you can live the sort of life you want both now and in the future.

Related: 5 Qualities Of Successful Entrepreneurs

That’s why the first step isn’t about getting a lot of money. Instead, it’s about teaching yourself to think positively about money. That way, you’ll be in the right mindset to move forward.

Click play to learn more.

This article was originally posted here on Entrepreneur.com.

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Personal Finance

4 Ways To Become A Millionaire Even When You Start With Little

It costs nothing to take advantage of the limitless opportunities online.

Timothy Sykes

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The hardest part of becoming successful is getting started to begin with. But despite the challenges ahead of you, there’s a way to become a millionaire when starting with little. I’m going to show you four reasons why you can become a millionaire with just a small investment.

1First focus on learning, not big gain

Education is your greatest weapon. Focus on learning in the beginning. Don’t make the mistake of focusing on making huge gains in the beginning. Learn everything you can because this is how you build the foundations for long-term gains.

They say that if a millionaire goes bankrupt they’ll nearly always be able to get it back. And that’s because they might have lost their money, but they have the knowledge of how to get back to where they need to be.

Related: 21 Choices Millionaires Make That You Aren’t Making But Should Be

2You can learn loads about any topic online

online-learning

I’m grateful for the internet. It’s the single biggest library in the world. You’re reading this article right now and you’re acquiring knowledge you wouldn’t have been able to acquire 40 years ago. Use the internet to its fullest extent, whether that’s through reading books, browsing articles or watching video tutorials.

Set some time aside every day to learn something online. It could be a video series or a favorite blog. When you get into the habit of learning regularly you’ll find that you advance much faster.

3Focus on the niche you love

These days you can learn about anything and target the niche you’re passionate about. This is what I was able to do with penny stocks. I found a gap in the market and provided knowledge to people who wouldn’t have otherwise being able to access this sort of information.

You can do that with absolutely any niche. When you find a niche you’re passionate about and you use the reach of the Internet you start to make huge gains.

4Prove your expertise by creating free content

Your reputation as an authority is the new business card. There’s a reason I created a penny stock guide and made it free for all. You may have already seen ads for it on social media. The way to succeed with little is to create a reputation through your content.

It’s the gateway to success because through free content you start to build relationships with others who value your work. And from there everyone gets richer.

Related: How To Become A Millionaire, Explained In 1 Minute

You can do lots with a little

The days when you needed a huge investment to become successful are long gone. These days you can do so much with just a little. Find what you love, advance your knowledge in that area, and create a product that fulfills a need. Finally, work on building up relationships through portraying yourself as an authority on your subject.

Combine everything together and you can accomplish anything.

This article was originally posted here on Entrepreneur.com.

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Personal Finance

12 Millionaire Habits To Start Making Serious Money Soon And Build Wealth In A Hurry

Get-rich-quick schemes rarely work but doing the right things every day rarely fails.

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There’s a mindset that’s prevalent these days. It’s one of instant gratification in an on-demand society that looks for quick results with very little effort. Entrepreneurs know that life doesn’t work that way. You need to put in the sweat equity if you’re looking to gain serious results.

When it comes to making money, certain good habits push us forward while some bad habits deter us from getting rich or even making any semblance of serious money.

Clearly, many people are making money and some are making lots, but if they mismanage it and pilfer it away on mindless pursuits, building the proverbial empire is going to be far harder.

Making money is one thing, but creating wealth is an entirely different thing. Obviously, most people can quickly make an extra $100 by selling used items or doing a small gig on a site like Fiverr, but if you’re looking for the kind of cash that can make a significant difference in your life, embrace these 12 millionaire habits. They are sure to drive you in the right direction. You’ll find ways to create real wealth by beckoning financial opportunity and potential windfalls through a positive mindset and a sound emotional, spiritual and mental state. That is quite literally the most powerful mixture of habits that exists for entrepreneurs.

1Always add value

Value makes the world go round. Everyone wants to get value out of an exchange. The most successful entrepreneurs in the world know that if you’re going to make lots of money, then you need to always be adding value. Always seek to add more value to whatever services, information or products you’re selling.

Related: 13 Habits Of Self-Made Millionaires You Could Adopt Today

2Wake up early

The early morning hours are replete with quiet solitude. It’s when you can refine your thoughts and implement your plans before all the distractions of the day. If you are constantly dealing with interruptions throughout your day, find your happy place in the morning. Wake up early so you can plan whatever will advance you toward your goals.

3Exercise

exercise-good-life

Making money isn’t just about implementing good career or business habits. You need to be fit emotionally and physically to fire on all pistons. Exercise in the morning, even if briefly. Exercising gets the blood flowing and oxygenation to the cells, helping you to think clearly and be laser-focused. This habit is implemented by some of the world’s richest entrepreneurs.

4Daily goal setting

You have your long-term goals in place but, if you’re looking to make serious money and quickly, you have to set goals every single day. These are milestones on your way to your biggest and most outlandish goals. Do this when you wake up, first thing in the morning, so that you stay on track and on target. Decide what will move you closer to those financial goals by the end of the day, then go out there and do it.

5Effective time management

Everyone in this world has the same amount of time. The 24 hours of each day is life’s greatest equaliser. It doesn’t matter what we do, where we’re from or how much money we have, we all have the same amount of time.

Effective time management is a must for those looking to get ahead. Whether your goal is to earn a lot of money over time or you just need to earn a little bit of extra cash quickly, properly managing your finite time is what makes it possible to succeed.

Related: 4 Bad Money Habits That Have Left Millionaires Broke

6Networking

Networking is one of the most important habits to have in life. The sayings go, your network is your net worth, and if you lie down with dogs, you’ll definitely come up with fleas. Reach out to others and find out what you can do to add value to their world.

Don’t ask for anything in return, especially not right away. Just insert yourself into the mix, and eventually the opportunities will find you.

7Innercising

John Assaraf

John Assaraf

John Assaraf, who built up a billion-dollar real estate business and is featured in the movie The Secret, preaches the importance of “innercising” in his NeuroGym system. Innercising is mental exercise to reprogram subliminal conditioning deeply embedded in our subconscious. The goal is to frame the mind with a positive financial outlook which attracts money and opportunities to our lives, rather than pushing them away.

8Healthy diet

Will eating healthier help you to attract more wealth or make more money in the interim? You can bet it will. Sound body, sound mind. To have the precision thinking and focus of a highly-trained athlete, you need to eat healthily. Our bodies spend a large amount of their energy on processing foods. Unhealthy eating leaves us with less energy for achieving our goals, whatever they are.

9Saving and investing

Obviously, saving and investing is fundamental to building wealth. It won’t happen as fast as you’d like, but the larger component at play is having moment-of-the-opportunity cash to invest when something requires your attention immediately. When you have capital and are no longer living paycheck-to-paycheck, you’re ready to earn more money when the opportunity presents.

Related: 20 Habits Holding Me Back From Being A Millionaire

10Mindfulness

If you play a cutthroat game and walk all over people, few opportunities will come your way. Being mindful and respectful of others attracts opportunities that you can eventually convert into cash. Be mindful about how you act and what you say so it doesn’t come back to bite you in the butt.

11Work with a mentor

Mentors are great for helping you to earn extra income, whether small or large. A mentor who’s achieved outlandish goals in your industry will offer guidance to help you get where you’re looking to go.

Find a mentor and work with them daily. Ask for their help and guidance as you navigate the choppy waters towards success.

12Contribute to others

Contribution is born from an abundant mindset. When you are sated and have enough for yourself, look to contribute. You can trick your mind into an abundant mindset by simply contributing your time to others. You don’t have to give money. Only time. It’s a subconscious mind trick that moves you away from scarcity to attract more money and opportunities into your life.

This article was originally posted here on Entrepreneur.com.

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