Managing your debt the easy way

11 September 2020 | Opinion

Windhoek • Loide David

In August, the Bank of Namibia (BoN) cut its benchmark interest rate by another 25 basis points (BPS), a standard unit of measure for interest rates, to a record low of 3.75% after the South African Reserve Bank's interest rate was cut by the same margin in July.
It is the lowest interest rate ever recorded in Namibia.
BoN also announced that commercial banks had granted debt relief worth N$9.2 billion to sectors affected by Covid-19. These decisions were put in place to mitigate the economic challenges caused by Covid-19 such as salary cuts, job losses, and the reduction in incomes for individuals, households, and businesses. The result is an increase in high debt levels.
Dealing with debt might not always be pleasant. However, with a solid plan, debt can be managed, reduced, and even eliminated. With the added pressures of Covid-19, here are a few suggestions to consider to reduce your debt during these challenging times:
• Create an emergency budget
Draw up a budget based on your current income and your monthly expenses. A household budget works best when everybody is involved. Sit with your family and discuss ways to reduce costs and how you can save money. Make them accountable for contributing toward savings. Consider, for example, placing non-essential monthly items like subscription fee services on hold, carpooling to save on fuel and taking packed lunches to work and school. At the end of the month, show your family how much was saved and how your emergency savings has grown as a result of the collective effort.
• Track your spending habits
On your tracker, state where you spent your money and on what. Bank Windhoek’s AlertMe SMS service tracks your spending by informing you where you swiped and for how much. This is a handy tool for managing your budget. Subscribe to get your monthly statement by email and at the end of the month, check your statement for any inaccuracies.
• Take charge of your debt
Make a list of your current debt obligations from the highest priority to the lowest, recording the monthly instalments and arrears, if any. For instance, mortgage and vehicle payments must take precedence, followed by credit cards and other high-interest debts like clothing accounts. Have a clear understanding of your debt, what each of the lenders is willing to do for you, and how you will tackle your debt, then develop and execute your plan.
• Tackle smaller debts first
This will free up money to put towards your more significant and high-interest rate debts. From your debt list, figure out which one has the lowest balance and work on settling it as soon as possible. Then, close the account. As you get rid of small debts balances, put that same monthly payment toward another debt balance.
• Seek advice if you are uncertain: Keep in mind that people need help right now, and banks and other lenders are working hard to support you. They will appreciate you being proactive and help you find solutions.
Getting your finances sorted out as soon as possible goes a long way to alleviate your money worries. It is also good for your mental health, as it will alleviate some of the tension and stress you might be feeling.
• Loide David is Bank Windhoek’s market research analyst.

Similar News

 

Card fraud on the increase

3 days ago - 17 September 2020 | Opinion

Windhoek • Riaan ViljoenDuring the lockdown, a whole new generation of users discovered the joys and convenience of online shopping.Worldwide, online debit or credit card...

Be our guest and be your own host

5 days ago - 15 September 2020 | Opinion

Windhoek • Jurgen IsaacsWe sit behind our computer, tablets and other devices all day. Creating documents, doing projects, sending out quotes and all matter of...

Safeguarding our children’s mental health

6 days ago - 14 September 2020 | Opinion

Windhoek • Ayesha WentworthLife is tough, no doubt about it. Just assess your own life and all the things that are thrown at you on...

No going back to old way of schooling

1 week ago - 11 September 2020 | Opinion

Windhoek • Prateek KhareWith the reopening of schools around the country, there are many questions in the minds of every stakeholder of the education sector,...

Is your testament up to date?

1 week ago - 10 September 2020 | Opinion

Windhoek • Paulina ElifasCrises have one thing in common: crucial decisions matter. One lesson we continue to learn as we fight Covid-19, is the significance...

An argument for cannabis

2 weeks ago - 03 September 2020 | Opinion

Windhoek • Angela Prusa2020 is slowly coming to an end. As I reflect on the Cannabis Journey in Namibia, I want to share the following:...

To truly develop Namibia

2 weeks ago - 31 August 2020 | Opinion

Windhoek • Llewellyn le HanéWe talk a good game as Namibians, but we are prone to not embracing real change. A small shift here, a...

When the going gets tough…

3 weeks ago - 27 August 2020 | Opinion

Windhoek • Sidney HansteinTeam Namibia member Outsourcing Solutions, a locally owned company that specialises in tailoring world-class human resource services to the needs of Namibian...

Be the CEO of your finances

3 weeks ago - 27 August 2020 | Opinion

Windhoek • Ester KaliAs we draw to an end of women’s month, allow us to reflect the importance of women when it comes to her...

Entrepreneurs should not travel alone

1 month - 20 August 2020 | Opinion

Windhoek • Melkies AusikuThere’s an African saying: “If you want to go fast, go alone. If you want to go far, go together”.Although bit of...

Latest News

Qatar also heading back to...

3 days ago - 17 September 2020 | Transport

Come 15 October, Qatar Airways will be flying to Windhoek three times a week again.The announcement came earlier today, and follows the decision by Eurowings...

Sen Pang leads UN Namibia

3 days ago - 17 September 2020 | People

Sen Pang, the newly appointed United Nations Resident Coordinator in Namibia, was received at State House, where he handed over his Letter of Credence and...

Informal market coming for Havana

3 days ago - 17 September 2020 | Infrastructure

Windhoek mayor Fransina Kahungu said the city received a pledge of N$5 million from the ministry of industrialisation, trade and SME development to help build...

Eurowings makes a Namibian return

3 days ago - 17 September 2020 | Transport

Eurowings will resume their Frankfurt-Windhoek route this weekend, with the first flight landing at the Hosea Kutako International Airport (HKIA) on Sunday.In a media statement,...

Another Air Namibia resignation

3 days ago - 17 September 2020 | Business

The national airline’s chief financial officer Werner Schuckmann has tendered his resignation with effect 30 September 2020.The process to recruit a substantive chief financial officer...

Card fraud on the increase

3 days ago - 17 September 2020 | Opinion

Windhoek • Riaan ViljoenDuring the lockdown, a whole new generation of users discovered the joys and convenience of online shopping.Worldwide, online debit or credit card...

Masking Namibia

3 days ago - 17 September 2020 | Social Issues

Local social impact agency, Arba Stature, in partnership with Namibia Breweries Limited (NBL) donated 2253 face masks to 25 schools through its #CoverNamibia campaign.Designed to...

GIPF says investments safe

3 days ago - 17 September 2020 | Economics

The Government Institutions Pension Fund (GIPF) said that it is aware of the de-registration of the Baobab Capital (Pty) Ltd (the fund manager) and Baobab...

International accolade for EIF

4 days ago - 16 September 2020 | Environment

The Environmental Investment Fund of Namibia (EIF) received a certificate of merit for outstanding Sustainable Project Financing at the Karlsruhe Sustainable Finance Awards, recognising its...

Load More