Debt counselling and financial wellness education
Lechedzani Pitso | Monday November 10, 2014 16:02
There are few of us who can claim such a position into today’s world. There are two things that all of us can do however, to start to achieve this stress free lifestyle. They are debt counselling - to get out of debt, and learning how to manage your money by getting a Financial Wellness Education.
What is debt counselling?
Debt counselling is a process that one can engage in, whereby a qualified person assists you to understand, calculate, negotiate and plan a way forward for you to get out of debt. There are several steps involved in this process; it is not a quick fix.
Acknowledge the problem
The first step in this situation is to acknowledge that if you’re in a bad financial position it almost certainly didn’t happen overnight. You’ve made some bad financial decisions and, unless you make some changes in your behaviour, you aren’t going to find an easy way out. Be honest with yourself.
Look for a qualified debt counsellor
When you are looking for a debt counselling service, it’s important to find out as much as possible about them before you pay any money. You are allowed to ask questions, such as:
* who are they?
* are they independent, or are they connected to a bank, insurance company, or loan company?
* are they just selling you another loan?
* what qualifications do they have?
* how much are their charges?
* how do they make their money?
* what are their expectations of you?
* how they plan to assist you?
You can then make an informed decision if they are right for you. You will also know what to expect from the process, and how much it is going to cost you.
Understand the debt counselling process
Debt counselling can be a long process; it will not fix your problems in an instant, so don’t expect this or ask for it. You must be committed to putting in the effort needed - under the guidance of your counsellor. This will involve communicating with your lenders, learning new behaviour patterns and getting self-discipline - to get yourself out of debt and back on the path to Financial Wellness.
Step 1: The first meeting
In the first meeting you and your counsellor will get to know each other.
The counsellor will ask you questions about yourself and your family. They’ll discuss all aspects of your life, so be prepared, take as much information with you as you can think of. This will save time and show the counsellor that you are committed to getting yourself out of debt.
Remember it is very important to be open and honest, do not hide anything.
If you agree to work together, the counsellor will walk you through how the process will work and explain the costs involved.
Step 2: Analysing your debts
Your counsellor will need all the information on all of your debts and assets: bank accounts, credit cards, employer salary, loans, etc in order to give you the best advice. They will usually at this point ask you to pay their fee to formally engage their services.
They’ll lay out the structure of how your relationship will work, and explain to you what is required from you from this point on.
You will be expected to visit your creditors, inform your employer of your debt counselling status, and visit your bank manager. Your counsellor should guide you, but you’ll also be putting in effort yourself.
You must be prepared to do a lot of the work; it is not your counsellor’s job to visit companies on your behalf. If you want to get out of debt, you must be prepared to help yourself.
Step 3: Educate yourself so you don’t get back into debt
It is important to seek Financial Education so that you understand your money and how to manage it to protect you from getting back into a similar situation again.
What is a “financial education”?
Financial education will teach us to understand some fundamentals of money management and reduce the emotional stress of debt.
When poor money management is plaguing you, you are at risk of getting yourself into financial trouble. This can lead to payday loans and advances, desperation, and even possible blacklisting.
Unfortunately, to date, not many of us have been given the opportunity to learn about basic money matters and as a result, we have become too reliant on debt, we all know the saying: “buy now, pay later”.
Nobody has shown us why when accepting this offer, we quickly become more in debt then we can afford in repayments.
Similarly, we fall victim to offers and opportunities introduced to us by skilled sales people, who don’t always have our best interests at heart.
We need to break these bad habits by obtaining Financial Education for ourselves.
“Everyone should take part in the Financial Wellness Programme, regardless of their income bracket or their education level”
A financial education shows us:
* The dangers of excessive debt
* How to managing a household budget
* Making your salary last to the end of the month
* How to save for a “rainy day”
10 ways to spot a scam
The secrets to making your money last to the end of the month.
*What is insurance and what is an investment, knowing the difference.
“People with a high sense of financial wellbeing have a comfortable relationship with money.”
You will soon be empowered to take control of your finances and aware of where your money goes each month, you will be able to plan and stick to a budget, have a financial plan, and meet your financial obligations.
You will experience a strong sense of wellness and health; spend more time focusing on your work and family and reach your highest potential.
Author: Lechedzani Pitso – Financial Wellness Trainer with S.C.I. Training (Pty) Ltd. © S.C.I. Training run financial wellness and debt counselling programmes in Botswana. For help and information contact them on 3180243 or 72309718 or leche@wellness.co.bw We are currently looking for people to share their stories with us to help us teach others who are experiencing similar problems. If you would like to volunteer for interviews, please contact us.