Windhoek
“Last week the repo rate went up again for the second time this year and for cash-strapped consumers this could mean barely making it every month when it comes to repayments,” says Brian Katjaerua, head of home loans at FNB Namibia. He adds that the home loan is, however, any person’s most important debt and asset and possibly also the biggest monthly debit order deduction. “Staying on top of home loans repayments should be a priority, and this should also be the last debt that anyone considers not re-paying in crunch times.”
He says the important factor to keep in mind is that one’s income must always be more than one’s monthly expenses. “The only way in which to make this work is to increase your income or lower your expenses,” adds Katjaerua . He also gave a few tips for bank customers with a mortgage.
Be overly strict for a few months
Make the money you earn work for you by implementing strict measures to manage your expenses, especially home loan instalments, as a matter of priority. “Study your bank statement and look at each expense leaving your bank account,” suggests Katjaerua. “More than likely unnecessary expenses are coming off, whether it is pay-TV, entertainment or even unnecessary banking fees, each dollar saved will help.
There is not much point in having pay-TV or ordering pizza in if you don’t have a home in which to enjoy these luxuries. It is important to note that this is not forever, just until you are back in a comfortable space. Also make sure you understand what you use the cash withdrawals for each month, as this, more often than not, is the likely source of unnecessary and uncontrolled spending.
Look at places to cut down
There are some necessary expenses that you cannot forgo. However, there are places to negotiate and cut down. “Insurance is one place that is open to negotiation, spend some time gathering quotes and renegotiating your insurance contracts,” suggests Katjaerua. Another place to cut down is services, such as cell phone bills.
“While having a cellphone is considered a necessary expense, racking up huge data costs to surf the internet or chatting for hours to friends is not necessary,” says Katjaerua. You can also look at your water and electricity bill consumption. Just by being more vigilant you can save on these expenses. The well-known debate of “needs” versus “wants” should always guide your decisions whether or not to spend.
Temporarily reduce on other investments
You can push pause or temporarily reduce contributions to other savings accounts. “This is not a long-term solution to solve your cash flow problems, but reducing your savings commitments for a few months may give you breathing space until you are back in a position to service your debts and continue investing and saving,” he says. Make sure that as soon as you are in a position to, you reinstate all your investments and savings contributions.
Earn extra income
If you are really not getting on top of your expenses and you are exceeding your income consistently, you will need to look at other ways to earn extra income. “Again this is not a long-term solution, but can help relieve the immediate pressure. “Consider working overtime to earn a bit more income, if you have the option,” says Katjaerua. Other ways of earning a bit more cash could be to rent out an extra room for a few months.
Don’t stop paying
“Don’t be tempted to miss or stop paying all together,” says Katjaerua. “Even partial payments show good faith and interest will accumulate slower, helping you to catch up.” However, partial payment is not a long-term solution. If you are really struggling, speak to your bank. Admitting you need help as soon as you realise that you are heading into financial difficulty will go a long way to protecting your home. “Your bank may enter into acceptable arrangements with you to ensure that you keep your home. Repossession is the last resort and a bank will assist you in every possible way to ensure this doesn’t happen,” says Katjaerua.