“Never spend your money before you have earned it.” – Thomas Jefferson
Whilst these are wise words to live by if we can, Mr Jefferson lived around the turn of the 19th century, over 100 years before banks started offering us credit. For decades, people were mostly cautious, two world wars helped with that, but slowly as we hit the 80’s, 90’s and 21st-Century, credit cards have become a standard method of payment for most people.
It’s great to have money when you need it and to be able to build up savings pockets for big purchases, but life doesn’t always run according to our savings schedules, jobs don’t always last and sometimes we need to have finance for urgent needs and emergencies. This is when banks step in, loan us the money and help us finance our emergency needs.
But if we’re not careful, we may never finish repaying those loans and credit cards. Having the peace-of-mind that our liquidity is bolstered can easily leave us with a false sense of security because, at the end of the day, it’s not our money. We haven’t earned it and we need to pay it back.
One thing we’re not openly told is that we can negotiate our interest rate on the money that is still due. Sometimes, even if we are aware, it seems like such a small amount and it won’t make much difference, so we choose to slug on and not bother with changing it. But when it comes to paying back money over several years, 1% in your interest rate could make the difference of tens of thousands of rands.
If you have credit card debt, student loans, car loans or home loans, speak to your bank about reducing the interest rate. Do some research and find out what rates they’re offering to new customers and see if it’s better than what you’re getting. If you’ve been with your bank for some time, you can show value in your loyalty to them over the years. It also helps to stay on top of your minimum payments so that your bank sees you in good standing.
Talking to your bank about interest rates is one of several savvy ways to reduce your debt and work towards living in a debt-free wealthspace. If you’d like some more help, please chat to us today and let’s see how we can empower your journey forward.
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