Receiving your salary into your bank account at the end of the month is like introducing an ice cream cake at a nursery school party. Let’s just say that by the time you’ve blinked your eyes, both the cake and your bank balance have halved!

The irony is that we spend at least 160 hours a month busting a gut (often in jobs we don’t really like) to earn a pay cheque that is halved within a few days.

The trouble really starts to creep in when we take on more and more loans that we really can’t afford to pay back.

Before you know it, most of your salary is going towards paying back debt, and as a result you need to borrow more money to keep the home fires burning.

It’s a slippery slope that can end up in bankruptcy.

Is there a warning sign?

At what point do you say, “Hold on a second, I’m spending too much of my salary on repaying debt”?

Our Free MoneyShop Credit Report includes several neat features.

First off, Our MoneyShop Credit Score™ will accurately predict what your chances are of getting approved for a loan via our website. We recently published a post on our website that you might want to check out after reading this.

The Affordability Assessment indicator built into our Free Credit Report will give you an idea of what percentage (%) of your income you are spending on credit instalments.

This is handy because you probably aren’t even aware of how much money you are spending on debt repayments each month.

It’s a fact that the more credit you can afford, the better your credit score will be, and the more likely you are to get approved for credit in the future.

But a good rule of thumb is that you want to keep your income spent on credit instalments in a range of 25% – 50% of your income.

Ideally you want to keep it below 25% of your income.

When you are at levels exceeding 50% (and perhaps even pushing as high as 75%) it should give you a real sense that your debt repayment commitments are getting out of control.

Committing 75% of your salary each month towards debt repayments doesn’t leave you with much money for anything else, does it?

Why don’t you start by getting your hands on our Free Credit Report today? Thousands of South Africans have already benefitted from the insights the report offers.

Until next time.

The MoneyShop Team