Slot says that households have some room to increase debt repayments from the recommended 35 percent ? but this should only be done when the extra repayment is going to a home loan, and definitely not towards vehicles or credit cards. Even then, the monthly debt repayments should not exceed 40 percent of monthly income.

"Monthly debt repayments that are between 40 to 50 percent of monthly income put the household in a dangerous position," cautions Slot. "Should there be any financial emergency, these debt commitments will not be met and all sorts of problems may then arise. Any household in this elevated zone should start working on reducing the debt that is giving rise to such high monthly repayments. Do not take out new loans, not even debt consolidation loans, and cut up credit cards, close accounts and reduce credit limits."

Slot says that monthly debt repayments that exceed 50 percent of monthly income is excessive, even irresponsible, and there will inevitably be cash flow problems. "Someone in this position needs to actively work on reducing debt as quickly as possible. Should cash flow problems arise and debt cannot be serviced, the consumer should then consider consulting with a National Credit Regulator-registered debt counsellor for professional assistance."

Personal financial 'To Do' list

Coming up to the end of the year, Slot says consumers need to take stock of their financial matters and draw up a personal financial 'To Do' list.

"This means revisiting medical plans as they come up for annual renewal, consider staying home this holiday season instead of going away and reassessing short term insurance cover values, such as the car, to see if premiums can be reduced. Use any bonuses or thirteenth cheques for early payment of accounts or for next year's educational fees, overpay some monthly debt repayments and even prepay anticipated credit card spending.

"Do not start off 2010 without a sensible and detailed monthly budget. Then stick to it, even improve on it, during the year."