Even if you manage to enjoy a financially savvy Black Friday, the festive season will quickly be upon us and will kick off the frenzy of “special deals” and “discounts” – bombarding consumers that have not had a great year as far as personal finances go.
“We have seen the same trend every year since we’ve been assisting consumers with managing their debt after it got out of hand,” said Benay Sager, chief operating officer of debt counsellor, DebtBusters.
“Our busiest time of the year is usually January to April as consumers are finally forced to face the reality of their financial situation in the new year.”
But Sager warned that 2018 could be even worse, as consumers have been dealt a rough set of cards with news of South Africa’s recessional economic state breaking, as well as the VAT increase and various fuel price hikes.
DebtBusters reported an earlier spike in debt management enquiries – since September this year – and says it is not predicting a great 2019 at all.
“Consumers should avoid being sucked into the hype of concepts such as Black Friday – we cannot emphasise it enough,” Sager said. “Make wise purchasing decisions in these tough financial times.”
Consumers are already hanging on by a thread as far as their debt levels go., he said.
DebtBusters’s own stats show that clients who signed up for debt counselling in the past year had significantly fewer credit agreements (6.4 on average) than the average of 9.6 credit agreements debt counselling clients had in 2013.
This is a clear indication that consumers are becoming over-indebted a lot quicker than before.
“We encourage consumers to make Black Friday work for them. Instead of splurging on items simply because they are on sale, be strategic about purchasing decisions and only buy items that you really need, can realistically afford, and have been saving up for,” said Sager.
DebtBusters recommended the following tips to enjoy a financially savvy Black Friday:
- Have a plan in place
Writing a list of items that you need and factoring them into your budget will ensure you spend within your means and will prevent you from buying unnecessary items and overspending. Specifying what you are willing to pay for each item beforehand will also help level your own expectations.
- Set yourself a spending limit
Before you write a list of items that you need, give yourself an overall spending limit that you know you can realistically afford. With the festive season also being around the corner, you can use Black Friday as an opportunity to purchase gifts for cheaper than you would usually get them. You should also set yourself an overall spending limit for gift purchases.
- Avoid buying on credit
It is always important to avoid buying luxury items or non-essential items on credit, as the accumulation of credit card debt can cause your personal finances to start spiralling out of control.
It is important to note that the novelty of an item purchased on credit may wear off, but the long term commitment of paying off this item will remain. Purchasing items with cash this Black Friday will minimise long term debt commitments.