Do you fear a debt judgement?

Civil summonses for debt have risen according to new data released by Statistics SA on Thursday may 21st 2009. There are more people being taken to court for unpaid debts than before. In fact the rise of civil summonses for debt rose from March 2008 to March 2009 by an enormous 40.9 percent! With 125 306 cases issued in March 2009 alone! These are scary figures, so if you feel you are close to the wire with your debt, what can you do?

• Consolidate your debt
• Compare your credit cards
• Bust your debt

Out of the 125 306 people taken to court for debt in March 2009 67 174 had judgements recorded against them. Don't let that be you! Debt consolidation works by folding your debts into your homeloan allowing you to pay off at a lower rate of interest. If you compare credit cards you can find the lowest interest rate offering or get a balance transfer card. If you are really deep in it, don't panic, there are still things that you can do.

Debt counselling was set up by the National Credit Act of 2007 and basically provides a legal mechanism for you to protect your assets if you are over-indebted. Debt counsellors can help you draw up a repayment plan and are legally able to freeze claims on your assets whilst you undergo the process. This protects what you own while you pay it off. A debt counsellor can also negotiate with the people you owe money to on your behalf. With data like this showing that debt judgements are on the rise, the most important thing to do is to not put your head in the sand and deal with your debt issues today.

Are you still going shopping?

New data released by Statistics SA has shown that the retail trade has dropped off in the first three months of 2009 by 2.9 percent in real terms. The drop off comparing March 2009 to March 2008 is a staggering 5.3 percent lower. This means that less folk have got the cash to go shopping. So if you want to be able to still go out to the shops now and again, what should you do?

• Plan a budget
• Compare your credit cards
• Only get what you need

These figures are a bit of a shocker and plainly show that there is just not as much money floating around as this time last year. The numbers show a drop if held to constant prices from 2008, which means that if you take out the effect of inflation then people are buying less than before. These sort of figures suggest that the economy is contracting raising fears of a recession. In conjunction with these numbers manufacturing output was also down indicating that fewer goods are being made, which shows us that even less is expected to be sold in the next few months.

If you put together retail sales and manufacturing output this makes up a sizable portion of our Gross Domestic Product or GDP, somewhere in the region of a third. So we can surmise that a third portion of our economy is already in decline. So if you really do need to spend make sure that your budget is up to date, shop around and compare your credit cards to make sure you are getting the absolute best interest rate and best value card. We can expect the economy to falter further so don't splash out just yet, in fact put some money away and it will come in really handy when the economic outlook starts to improve again.

Filling up on your credit card

The Department of Minerals and Energy has published draft regulations for comment on changing the law to allow petrol purchases with credit cards. If you wanna respond then you gotta write it down and send it in before the 30th of May 2009. Previously it has been illegal to pay for petrol with a regular credit card. This is due to petrol prices being set by government and the cost of using a card is carried by retailers and credit card holders get benefits from their cards. This amounts to a discount for consumers or a burden for retailers which would skew the pricing as established by Government. Now the Government want to open it up for the World Cup 2010. So if they do what should you do?

• Compare your Credit Cards
• Plan your Budget
• Don't go overboard

The draft regulation contains this clause: 'The costs to a retailer arising from the acceptance of payment in the form of debit, credit and hybrid cards must not exceed the costs of cash as a form of payment determined by the Department of Minerals and Energy on an annual basis'. The difficulty here is that the cost of paying via a credit card will have to be picked up by someone. If the petrol stations are not supposed to pay over the cost of cash will the banks meet this and allow free transactions on petrol purchases? This seems highly unlikely.

Further the Petro card setup we have at the moment charges interest on all purchases from time of purchase rather than allowing an interest free period like most regular credit cards have. Would this continue or would the banks extend the interest free period to fuel purchases and could this then be used to offset the transaction cost that the proposed law stipulates is to not be more than the cash cost? The commentary period is almost over so if you want to have your say write it down and send it to the Department. This law could change how you budget for petrol and have long reaching effects so get involved.

Food or booze?

Statistics SA released new data on the 7th of May 2009 that looked at food and beverages in February. The industry as a whole is looking up and expanded by 7.6 percent for the three months to February 2009. This report looks at what we are spending on food and drink and it shows that food sales are up 10.8% but that alcohol sales from bars are down 14.9 percent. This means we are spending less in the bars and more on food. Take away and fast food outlets also recorded an increase in income of 21.9 percent. So what can you do to save money?

• Plan a budget and stick to it
• Cut down on your parties
• Cash not credit cards

The downturn is here and we all need to find ways to cut down on our spending while not cutting down on our quality time with friends and family. The Times came at these figures with the killer headline 'Less dop and more tjop'. They reckon that the increase in food sales can be directly attributed to interest rates falling and the savings that they have delivered. Basically you pay less to service your debt and you have a bit of extra cash in your pocket that the figures show is being spent on food. Instead of going out to fancy restaurants folk are still going out for a bite to eat but to the take away shop instead. Restaurants are closing down as less people have the cash to eat out in a higher cost establishment.

The Dispatch also looked at these numbers and noted that 'in difficult times people preferred to spend their extra cash on food rather than alcohol'. So if and when you are tempted, drink that six-pack at home with a take away rather than head out to the style bar with the expensive cocktails and really tiny canapés. Make sure you know what is in your budget at all times so that you can know what you can spend on and what you shouldn't and never use your credit card on consumables as you pay way over the odds on something that is gone as soon as you eat it.