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Take control of your financial wellness during times of crisis


Published: May 25, 2020
Categories: Debt Relief, Financial wellness
Tags: Consolidation Loan, Credit Health, Debt Consolidation, Debt Counselling, Debt Management, Debt Relief, Debt stress, Financial education, Financial Health, Financial Planning
Debt Consolidation Loan

The Covid-19 pandemic has placed a great amount of stress and uncertainty on everyone. There are concerns around job security, a global recession, physical health and overall financial wellness.

With so much to worry about already, you should do whatever you can to avoid developing debt stress syndrome. Stressing over your finances can put you under more pressure which could lead to a compromised immune system, making you more susceptible to illnesses – and given the violently contagious Coronavirus pandemic, you want to keep your mental, emotional and physical health in top form.

4 steps to healthier debt management

While you can’t personally control the global impact of the virus, nor the state of the economy as a result of the Covid-19 disease; you can start by getting a better handle on your own financial health.

Financial Wellness

Step 1: Make a list of all your debt

Make a list of all your existing debt. This includes personal loans, car loans, home loans, short-term loans and all credit card debt. Being organised during the process will go a long way towards alleviating your stress as you will start to feel more in control of your finances. Consider using a file where you can keep all your debt-related documents, or create a folder on a computer to store all your documents should you prefer. This will allow you to make changes as you work towards becoming debt-free.

Step 2: Get to know your debt intimately

After writing down all your debt, you need to dig deeper into your finances. Before you can prioritise your existing debt, you need to examine them thoroughly. Work through your list of debt and gather as much information as possible regarding all of your debts. It is important to be accurate and specific when putting this list together.

  • Get in touch with your credit providers and request the most recent statements.
  • Know how much is outstanding with each credit provider.
  • Confirm your monthly repayments for each debt.
  • Find out what interest you are paying monthly, and whether you are paying a fixed or flexible interest rate.
  • Understand any additional administrative fees you might be paying.
  • Check if the credit provider has included credit insurance in the event of a loss of job or disability.
  • Find out if the credit provider offers payment holidays or any form of debt relief.
  • Confirm the duration of the loan and when the repayment terms should expire.
  • Verify how much you credit you initially were granted and how much you are still owing.
  • Confirm the date that each payment is due, and whether it is automatically debited off your account or if you make manual payments.
  • Get a copy of your credit health report and find out what your credit score is.
  • Note whether you have been keeping up with your payments or if you are behind on any debts.
  • Check with your credit providers whether a penalty fee will be charged for paying off your debt early.

Step 3: Prioritise your debt

There is a difference between good debt and bad debt, but when your debt gets out of hand and you struggle to meet your repayments, then they all become bad debt as this will have a negative impact on your credit health report.

Prioritising your debt is an essential step in preventing yourself from feeling as though you are drowning in a sea of debt. There isn’t a wrong way to prioritise your debt and how choose to prioritise your debt is up to you, however here as some suggestions to guide you through the prioritisation of your existing debt.

  • Consider paying off your debt with the highest interest rates first.
  • Prioritise your debt according to your household needs. Your home loan or rent should take first priority to keep a roof over your head.
  • If you still owe money on your car and you rely heavily on it to get to work and back, this can be another example of a high priority debt.
  • Prioritise your remaining debts (like retails accounts, credit cards and personal loans) according to the interest rate.
  • Consider paying off debts that are smaller and near completion sooner as this could reflect positively on your credit record.
  • Beware of any credit providers that are threatening to blacklist you or hand you over to debt collectors, and know where you have not been able to honour your payments as these might need to be attended to first.
  • Contact those debt providers that offer payment holidays to make arrangements to put them while you take care of those outstanding debts who do not offer debt relief.

Step 4: Consolidate your debt

There are a number of debt management options that can offer you debt relief and improve your financial wellbeing; one of which is to consolidate your debt.

Consolidating your credit cards or personal loans can help you streamline your debt loans into a single more manageable debt consolidation loan. When you consolidate your debt, you are combining all your credit cards and loans into one, which means that you only have one credit provider that you are borrowing money from, with a single monthly payment to worry about, and usually at considerably lower repayments than what you were originally paying when you had to pay multiple creditors with varying interest rates.

If debt consolidation sounds like an option for you to consider, you’ll need to begin searching for the best debt consolidation option to meet your needs. This requires some time on your part as there are many companies which offer this service, some are good – and some, not so good. Be sure to take time to fully research a credit consolidation company prior to doing business with them.

Here are some important questions to ask when choosing your debt consolidation provider:

  1. Do they offer unsecured short-term consolidation loans?
  2. Are their interest rates reasonable in comparison to others?
  3. Do they offer debt relief or debt counselling services?
  4. o they provide financial wellness support?
  5. Do they give you access to a free credit health report?
  6. Do they offer credit insurance?
  7. Do they offer payroll or employer lending options?
  8. Are they a registered and credible lender?
  9. Can you to manage and make payments online?
  10. Can you access your monthly statements online?

Whether you are under financial pressure, or simply aspire to live a debt-free life, it is always good idea to you know that you are in control of your finances, rather than feeling as though your finances are controlling you.

Take control of your financial wellness, improve your credit health and start your journey to becoming financially stress and debt free.

If you are struggling with debt management, contact Bayport Financial Services to discuss the debt consolidation loan options available to you, or visit Bayport if you are ready to apply for a loan now.

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