How debt-aware are you?
Thirty-five percent of people are likely to be over-indebted.
In most cases it is not all that difficult to borrow money from a bank and get a credit card, but being unable to pay one’s debt could cause a lot of stress and land one in hot water.
The Herald asked Lou Brits, director and registered debt counsellor at The Debt Solver for advice about managing debt.
According to Lou, the pandemic, and resultant lockdown and job losses have left many people struggling to meet their monthly obligations. In addition, 35 percent are likely to be over-indebted. Some have fallen so far behind on debt repayments that they cannot catch up, even if they do find another job.
“Seventy-two percent of South Africans’ income goes to paying debt, according to Statistics SA,” said Lou.
He said that the majority of people fall into debt because they want to ‘keep up with the Joneses’ and then fall into arrears with their monthly instalments. If they do not seek assistance in the form of debt counselling or debt review to have their debt repayments restructured, creditors could take legal action, leaving them with a garnish order on their salary or a summons, and their car, furniture or house being repossessed.
The good news is that debt can also be ‘healthy’, for example when buying an affordable car or house, and being careful not to overspend on credit cards.
He gave the following tips on how to manage debt:
• Don’t get into debt unnecessarily
• It takes five minutes to get into debt, but a lifetime to get out of it
• When you plan on borrowing money, always consider that you also need money in your pocket to buy daily essentials
• Don’t fall behind on your debt, and if you do, make arrangements with your creditors as soon as possible
