5 steps you can take to manage a hike in interest rates

Try to pay off as much of your debt as possible. As interest rates rise, so do debt repayments. Loans could be tying up funds that could better service another area of your finances.

Another important consideration is that the risk of defaulting on your debt repayments increases during financially difficult times. If default occurs, it would spell bad news for your credit rating, which would jeopardise the ability to take out a loan in the future. If taking on more debt is necessary, knowing your credit score and assessing whether the debt works for you or against you may be the tipping point in the decision to take on more debt, particularly when interest rates are up.Investing in the property market is a lifelong goal for many. New entrants in the housing market should resist the temptation to accept the first mortgage offer that comes their way.

Banks are in competition with one another to be your home loan provider and the better offer is, more often than not, the one that’s below prime.Many may think of budgeting as the equivalent of wearing a financial straitjacket. But tracking your finances provides another way for finding opportunities to cut expenses and increase savings. Consider the opportunity cost of not budgeting. Without monitoring your cashflow, it becomes nearly impossible to make contingencies for unplanned expenses.

Clearly demarcating how much you will put away in savings can make a huge difference in the long run. Many households are more financially vulnerable than they think. In fact, most families are one medical emergency away from being financially devastated. Just think of the doctor’s consultation fees , ambulance call-out fees and out-of-pocket expenditure. With or without medical aid, making provisions for the unforeseen occurs through budgeting.

Source: Loan Digest (loandigest.net)

lol, conveniently forgetting that we were in junkstatus before the pandemic even began.

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