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Debt Solution for Graduate Intern

Mr A is a 25-year-old graduate who lives in the large agricultural town of Vryburg in the North West Province. He works as an intern for one of the largest mining companies in the world. Although he is single and has not yet started a family of his own, he takes care of his younger sister.

‘Mr A’s parents passed away and he suddenly had to take care of his younger sister’

Last year, Mr’s A’s parents tragically passed away in a car accident and he suddenly had to take care of his younger sister. Mr A had to pay for the funeral and had to take out a personal loan to cover the costs.

Mr A was unprepared for the enormous burden of caring for his sister. He had to take out a credit card, and clothing and retail accounts just to be able to feed and clothe her.

 

Salary: R14,000
Expenses:  
Rent R1,000
Electricity R400
Water R400
Cell phone R400
Vehicle insurance R1,100
Other transport R1,500
Food & household goods R2,000
Contingency R300
School fees R800
Bank charges R100
TOTAL: R8,000
Amount left over for debt repayment: R6,000

 

‘Mr A owes R10,299 monthly on debt. But, he only has R6,000!’

As you can see from the above table, Mr A earns a monthly salary of R14,000, while his expenses amount to R8,000. This leaves him with R6,000 to cover his debt repayments.

 

Debt Original Interest rate Original instalment
Credit card 2.74% R3,254
Personal loan 31.5% R5,066
Clothing account 26.00% R1,120
Retail account 23.00% R164
Clothing account 23.2% R25
Clothing account 23.20% R670
TOTAL: R10,299
Over-indebted by: R4,299

 

Here is where the problem comes in. The above table lists all of the instalments that Mr A is committed to paying every month. Mr A owes R10,299 monthly on debt. But, he only has R6,000 to spare monthly.

‘Instead of paying R10,299 monthly, Mr A is now only paying R5,626!’

 

Debt Reduced interest rate Reduced instalment
Credit card 2.74% R3,254
Personal loan 2.74% R2,066
Clothing account 2.49% R187
Clothing account 22.00% R0
Clothing account 2.35% R10
Clothing account 20.75% R109
TOTAL: R5,626
Amount saved on instalments: R4,673

 

NDA to the Rescue!

‘Mr A is saving R4,673 every month on debt repayment!’

NDA’s fearless crusaders for consumer justice stepped in and saved the day by going to Mr A’s credit providers and explaining his circumstances. We then negotiated to have Mr A’s instalments and rates reduced (see above table), so that he could afford to take care of his sister properly and to pay off his debts. Instead of paying R10,299 monthly, Mr A is now only paying R5,626!

This means that Mr A is also saving R4,673 every month on debt repayment! The first table shows that Mr A has a budget of R6,000 to pay for debt. So, this means he has R374 extra to spend or save as he pleases!

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