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Debt Solution for IT specialist

Mr M is a 32-year-old IT specialist who lives in Cape Town with his wife and two children. Mr M earns R17,200 monthly, while his wife earns R9,000. Therefore, their total household income is R26,200.

As they felt financially secure, the married couple decided to subscribe to a vacation club. But as the cost of living increased, they began to struggle. They were also over-spending on entertainment and leisure. Accordingly, they couldn’t afford their debt repayments and fell into arrears.

‘Taking out a debt consolidation loan… tipped them into over-indebtedness.’

It was at this point that they decided to consolidate their debts by taking out a debt consolidation loan. They believed that this would increase their cash flow. But this decision was a big mistake, as it tipped them into over-indebtedness.

Below is a table outlining what the M family earns and spends on a monthly basis.

Mr M’s Salary: R17,200
Mrs M’s Salary:
R9,000
TOTAL HOUSEHOLD INCOME: R26,200
Expenses:
Vehicle maintenance R400
Vehicle Fuel R2,500
TV License R100
Clothing R1,000
Food & household goods R3,000
Contingency R1,000
School fees R2,000
Bank charges R200
Rent R5,200
Electricity R750
Water R150
Cell phone R600
Vehicle insurance R500
Entertainment & leisure R6,300
TOTAL EXPENDITURE: R23,700
Available for debt: R2,700

 

As you can see from the table above, after expenses, Mrs and Mr M only had R2,500 available for debt repayment. However, the table below shows that they in fact owed R5,778 on a monthly basis.

Debt Contractual interest rate Contractual instalment
Vacation club subscription 15.50% R779
Clothing account 22.65% R199
Consolidation loan 30.90% R4,800
TOTAL: R5,778

 

‘This debt solution would improve their cash flow and protect them from legal consequences’

To provide the family with debt relief, National Debt Advisors suggested they apply for joint debt review. This debt solution would improve their cash flow and protect them from the legal consequences of unpaid debts.

Below you will see the lower interest rates and instalments NDA proposed to the couple’s creditors, who accepted these debt restructuring terms.

Debt Proposed interest rate Proposed Instalment
Vacation club subscription 0.34% R248
Clothing account 23.75% R63
Consolidation loan 30.90% R1,528
TOTAL: R1,839

 

‘Mrs and Mr M could focus on raising their two children without stressing about money.’

As a result, Mrs and Mr M were able to afford their debt repayments and their monthly expenses. Moreover, their credit providers stopped hassling them for payments. This put their minds at ease. As such, they could focus on raising their two children without stressing about money.

See the rest of our case studies, including debt solutions for a bachelorette, teacher and more.

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