Windhoek — With the economic pressure tightening its choke on households' disposable income, the only way out is to heed the often-repeated financial tips.

Make a budget and stick to it. Do not spend money on things you do not really need. Do not let yourself suck in debt more than 40 percent of your income.

Monica Kalondo, Chief Executive Officer of Stimulus, and renowned economist Martin Mwinga say it is better to take note of the financial tips, because things are likely to get worse this year.

The price of rice has gone up 237 percent since last year. Price of wheat has gone up 136 percent, maize and corn shot up 125 percent, while other cereals went up 107 percent. The food price index went up 57 percent since January.

The impacts are already visible.

"The value of houses and other properties has gone down to the levels they were two years ago," said Mwinga.

Yet, the monthly instalment and mortgages have skyrocketed. Two years ago, a monthly instalment on a house valued at N$150000 was around N$1600. Today, the instalment has gone up by N$500. However, salaries have not changed.

Usually, when consumers are stuck in economic crisis, the first thing they do is to borrow money.

Do not go that route. Avoid getting into more debts to finance current problems, says Kalondo.

Do not borrow more money, unless it is necessary. Instead, re-evaluate your current financial situation. Dispose of the unnecessary baggage, such as that sport utility vehicle with a high monthly premium burden. Cut off on other lifestyle spending habits, and live a balanced lifestyle.

"Things are likely to get worse before they improve," says Kalondo.

Equally, important is to calculate one's net worth just as the bank would when processing a loan application for the car. Counting your debt against the income and what one has is one way to do this. This would give a clear indication of the lifestyle you must live. Once done, Kalondo advises that a person "size up to his or her standard of living, and not to that of friends or neighbours".

In between, people should put an emphasis of saving for their retirement, putting a dollar aside for the rainy day. This should not be a large sum; it could be as little as N$100 or N$50.

"It might look little but it's the principle of saving we should inculcate in ourselves. We need to change our psyche towards saving," said Kalondo. Live a modest life.

Do budget and stick to it. One of the best ways regarding a budget is not to look at it as a restriction, some sort of a financial diet. Rather, look at budgeting as planning to get what one wants in the future. After all, it is much rewarding to live in comfort, drive an expensive SUV during retirement than having all these comforts now, and be a penniless pensioner.

For those in financial crisis do not despair, give up and wait for whatever misfortune to hit. Assess the debts, the living standard and take whatever step before the creditors knock on the door. Inform the creditors of your situation engage them and negotiate with sincerity on how to best to solve the problem. Do not wait for the repossession note or the delivery of the default judgment as that would be too late and you might lose what one could have saved. Kalondo advices people to keep their egos down and tackle the situation head on.

"Egos have no place in debt negotiations. Why try to impress people you do not know. Cashiers and officials at the creditors offices may laugh at you but in the end it is you who will smile afterwards if you sort out the situation," said Kalondo.

Another trap common with parents is the weakness of over compensating for what they did not have when they were children. Many adults today came from modest families with very little income. As a result, they do not want their children to grow up in the same way. It is a bad practice, says Kalondo.

"Teach your children that money does not grow on trees," she says.