Shrinking incomes, uncertainty about the future and the economy, and high levels of debt make it no surprise that South African consumers feel stressed and overwhelmed.
According to Benay Sager of DebtBusters, real income has shrunk across all income bands, in some cases by 20 percent compared to 2016. Consumers are increasingly turning to unsecured debt to make up for the shortfall.
“While payment holidays during the lockdown provided some relief when payments resumed, even consumers who were just getting by on their make ends meet struggled. Unfortunately, many people now take it for granted that they are financially burdened, ”he explained. He explained that the combination of this, the uncertainty about the situation in the country and one’s own future contributes to people feeling overwhelmed.
“The danger is that instead of tackling the problem, people will go into a state of denial and do nothing or become paralyzed by fear. It does not help that South Africa is a society in which many people avoid talking about debt for fear of stigmatization. That’s why our theme for National Debt Awareness Month this February is: Get help when you can’t cope with debt – it’s the responsible thing you have to do, ”he added.
He mentioned that the debt counseling sector in South Africa is world class and well positioned to support people who feel vulnerable because of debt and don’t want to talk about their problems or stress their loved ones.
“When you call a reputable debt counselor who is registered with the National Credit Regulator, you are dealing with a financial professional. First of all, it is checked whether debt counseling is helpful. This takes place in a safe room with an expert who looks at the situation empathetically but objectively, ”he continued.
Alternatively, consumers who prefer self-assessment can use online tools. Reputable debt counselors support consumers for whom debt counseling is an option and who opt for the procedure. They step in with the creditor and are on hand with help and advice throughout the entire process.
The important thing is that they also negotiate monthly debt cuts, especially on unsecured debts like personal loans and credit cards. This translates into significant savings on outstanding debt.
“When you feel out of control or think you are in financial trouble, it is always better to seek help sooner rather than later. The feedback we get from many consumers is that they wished they had sought help sooner because it made them feel like they were in control of their lives and finances, ”concluded Sager.