It’s been a week and I thought that I would have recovered by now, from the statistics recently shared by the National Credit Regulator (NCR). I’m still shook that so many people have become modern day slaves to debt. They have robbed their future selves by spending money they have yet to earn, some even on frivolous things. That people are working, living and breathing to solely pay bills and debt orders. That 10.23 million consumers can’t even keep up with their payments.

The Numbers and Stats

According to the NCR, there are 25 million active credit consumers, and 10.23 million (40%) are behind on their payments. The stats show that South Africans are over-indebted – and worse, are still clamouring for more credit like juiced up consumer zombies at the door of a store on black Friday.  This is confirmed by the one million applications for new credit, with 55.44% turned down. The total value of new credit granted in 2019’s first quarter (Q1), increased by more than 5% to over R134 billion in Q2. So people are getting into more debt (Claps once). There are 80 million accounts in South Africa, with 21 million in arrears by three months or more. K for Kubi indeed!

There is a large number of people who are over-indebted and another number who are digging their debt graves even deeper. What is fuelling this?

The Reasons

Too many South Africans have put themselves under pressure to ‘keep up with the Joneses’. Acquiring lavish things to show people that they are living, doing better and that they have arrived, but at who’s expense? Credit providers have also become slick and are successfully luring consumers into taking credit. The other day I came across an advertisement by one of the big retailers. They will allow you to buy alcohol on credit and you can pay it off in instalments like a TV or fridge. Just in time for Dezemba. Madness! There is also a lack of financial education and research. Consumers are just getting into debt for the sack of it. Just because you qualify, it doesn’t mean that you need to take it. The stagnant economy and tough economic times have also pushed people to bridge their salary’s by using debt.

I repeat, K for Kubi!!!!

I concede though that not all debt is bad. Some people are using credit to purchase assets or items with income-producing capacity or assets that have the potential to increase in capital value over time. This may be towards a mortgage, vehicle, business venture or some other necessity. These people have done their research, are focused and keep up with their monthly repayments. The problem is that too many people are on the opposite side, and are getting into debt for all the wrong reasons. No research, no reason and a lack of discipline to be able to make the necessary repayments. Now you are ghosting and blue-ticking creditors!

The Truth!

Consumers who are over-indebted need to come to the realisation that paying off all their debt is not going to happen in one or two months and that you they won’t get out of debt while still living the same lifestyle that got them into debt.

The WHY!?

When it comes to credit, the biggest question that you need to ask yourself is WHY? Failure to do this will leave you working, living and breathing to solely pay bills and debt orders. The modern day slave!