Even though we have felt the impact of family members losing jobs, electricity getting more expensive and food prices rising in leaps and bounds, we are still not taking debt repayment seriously enough. This is according to the Credit Bureau Monitor report for the second quarter of the year, which reveals that another 215 000 South Africans plunged into arrears of three months or more with their debt repayments.
Of course, we are still struggling with the after-effects of the economic downturn, but what is clear is that we’re not prioritising debt repayment. There are now over 11-million consumers struggling with their debt.
“These numbers are a massive concern, as even with interest rates and inflation at historic lows the debt burden is increasing,” said Luke Hirst, MD of Debtbusters. “We need to make the South African consumer is aware that taking out further debt to pay current debt is not the answer and will result in deeper financial pain. Households need to look at what they earn and make sure their expenses stay within their budget.”
Hirst maintains that a further rate cut will be necessary to assist consumers. “With over 400 000 distressed homeloans in South Africa and more consumers struggling to find work, interest rates have to be reduced urgently by at least 1%.
Otherwise these consumers are just going to give up and we will find ourselves in a worse position,” he said.
Rudi Visser of Debtbusters says that South Africans do not budget — and, if they do, they do not use their budgets to forward plan: “Don’t just budget for how much you’re likely to spend in a month, factor in expenses you might be faced with and work out if you can manage to cover these,” he said. “For example, think about price hikes, think about Christmas and don’t forget about unforeseen expenses — budget for those, too.”
Visser says he would like to see another rate cut, “but just enough of a cut to help South Africans keep up with their debt repayments”, he said.
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