Manage Health & Financial

Delay Debt (RD February 2008 Edition)

Struggling under debt, or want to save up to buy a home? This tip, from Debt Free, Cashed Up and Laughing by Cath Armstrong and Lea-Anne Brighton, should help fatten the piggy bank. The $100/24-hour rule is great to help ward off temptation. If you’re tempted to buy something that costs more than $100, commit to waiting for 24 hours before buying it. Then, weigh up your options:
• Do you really need it?
• Do you have the cash on hand?
• Will you need to borrow from your budget?
• Will you have to go into debt to buy it (credit or store cards, etc)?
• Can you raise the money to buy it (work overtime, a garage sale)?
Most of the time you’ll change your mind when you realise how much the desired item will really cost you to buy it on credit. This simple exercise can save you several years’ worth of debt repayments in the long run.

Should you lend money to a friend?(RD July 2008 Edition)

Lend money to a friend, and you’re liable to lose both.

But when someone close hits you up for a loan, it can be tough to say no. The first consideration, say financial experts, is whether you can afford it. If you can’t afford to give the money away, you can’t afford to lend it. Next, get it in writing. For big amounts, a repayment schedule helps to legitimise the loan. “It protects the lender, and can make the recipient more comfortable, so they don’t see the loan as charity,” says Howard Levine, a chartered accountant. Should you charge interest? It’s not mandatory, and may have tax implications. But if your money would be earning 5% on a term deposit, charge the same 5%. Or structure it as a loan but forgo the interest on repayment. And if a pal defaults? For lenders, it’s not just the amount that can cause a rift, but the feeling that you’re being taken advantage of.

Levine advises borrowers not to avoid the topic: “Pay back what you can, even if it’s just a bit. If you can’t pay it back, be up-front. Don’t just ignore it

Holiday Spending (RD December 2006 Edition)

To keep your expenses in check during the festive season, budget counsellor Rosemary MacDonald suggests:

Estimate how much you can afford for gifts. Add in a cushion for entertaining and decorating costs. Buying on credit? You should be able to pay for your purchases within three months. You shouldn’t be paying off Christmas debt in July.

Make a detailed shopping list and scan fliers to find the best prices, or consult a bargain-hunting friend on where to find good deals.

Do price comparisons over the phone where you can’t be lured by glitzy displays to spend more than you intend. Once you’ve nailed down a deal, head for that department, buy it and get out as fast as you can.

Shop online. You’ll save time and avoid temptation. Although you might have to pay delivery costs, this makes sense for out-of-town family or friends whose gifts you’d have to mail anyway.