Business 6.12.2016 05:51 am

Resist festive urge to overspend, rather pay debt – expert

Image courtesy of Chance Agrella/Freerangestock.com

Image courtesy of Chance Agrella/Freerangestock.com

Roets also urged consumers to rather save their Christmas bonus and use it to pay school fees and other accounts.

The drop in fuel price that comes into effect at midnight on Tuesday and recent decisions by the three main sovereign rating agencies not to downgrade South Africa to junk status is all Christmas cheer, but an economist warns consumers against opening their purses too wide this festive season.

The price of petrol will drop by 20 cents a litre and the diesel price will be reduced by 31 cents a litre.

The fuel price drop adds to last week’s good news for the country that S&P Global decided not to downgrade South Africa from investment status.

Debt Rescue CEO Neil Roets said: “The trick now is not to let this feel-good factor open our purse strings too wide and incur debt that very few of us can handle on top of our existing debt load.”

The majority of the South African population are in debt, with a large number of people on debt review which, Roets said, was a good idea as it allowed consumers to repay debt in smaller instalments over a longer period of time while protecting their assets from being attached by debt collectors.

“The problem is not just the debt piling up, but the fact that more than a quarter of the workforce is unemployed and lack the means to service their outstanding debt effectively.

“The only other option this holiday season is to act prudently with funds that are available, such as a bonus or a 13th cheque, and rather spend some or most of it on paying off outstanding debt, or to save some of it for the payment of school fees and other accounts.”

Roets said his company enrolled more clients for debt review in January and February than during any other month of the year because of additional debts that had been stacked up during the holiday season.

“They forget that the time between their early pay cheque in December and the next cheque at the end of January can be the longest five or six weeks of the year.”

Roets said the best remedy for consumers who had fallen into the debt quagmire remained debt review.

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