By Zuko Komisa
When it comes to managing your finances, understanding how much debt you should be taking is very important.
If you are planning on getting into debt this festive season, there is a useful indicator to see if you are on the right track, and it is called your debt-to-income ratio (DTI)
This is a ratio you get when you divide all of your monthly debt payments by your gross monthly income.
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This figure is one method lenders assess your capacity to handle the regular payments necessary to pay back the money you intend to borrow.
Kaya Biz with Gugulethu Mfuphi spoke to Maya Fischer Flinch, a personal finance journalist who gave insights on some of the financial concerns that consumers should put into consideration this festive season.
Decide how much you will be spending this December
“One has to look ahead and say, what am I going to come back on, do I have savings, have I saved? There are people who have saved and who maybe have a stokvel, and even a 13th cheque.”
“I think it is very important as a family to say, this is what we will be doing this this December, that won’t lend us in massive debt next year.”
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Highest default are inn April’
Flinch spoke about how the South African Credit Bureau has stated that the highest default happens in April.
“Defaults from a credit bereau perspective is when you have missed three (3) payments in a row.”
“What happens is that we go splurging in December and January, and we miss the February, Marrch and April payments, and we end up in defaulting. This is a cycle many people get caught up in.”
She also spoke about inflation, what we need to do to make sure we don’t get over indebted and the most responsible course of action for this festive season.
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