DebtBusters Release Results Of Money Stress Tracker
Over the last few weeks, debt counselling practice DebtBusters have been speaking to 14 000 people and asking them about their debt situation and how they cope.
The focus of the DebtBusters Money Stress Tracker survey has been to see how all types of South African consumers (and specifically those who are not in debt review) are coping with the recent financial pressures caused by the Pandemic, the lingering effects of the 2008 economic collapse, reduction of growth economically, flooding and riots in KZN, load shedding etc, etc.
Are People Stressed By Their Current Financial Situation?
The answer will not surprise you. Around 70% of the people surveyed said they are experiencing debt stress and it was now impacting on their homelife as well as worklife.
Women Feeling The Stress More Than Men?
One of the interesting trends that was repeatedly revealed by the Money Stress Tracker is that the results leaned towards women (30% more) feeling more stressed about their financial situation than men.
Women surveyed were more aware and apparently more open about how their debt is impacting on their home life and monthly expenses. The women surveyed seemed to be more aware of the increasing cost of living and unfortunately more exposed to stagnating income.
What Are Consumers Worried About?
When asked what their main concerns were about their finances, half said they worry about running out of money before the end of the month. Around a third said they struggle to pay their debt each month.
So, what are these consumers doing about their situation?
While many have simply reduced their spending on everything (from accommodation to food) 1 out of 4 are busy looking for a better job to try to cover their financial needs. This can have a massive impact on businesses as they may face a potential huge loss of experienced workers to better paying competitors.
‘1 out of 4 are busy looking for a better job to try to cover their financial needs’
DebtBusters have a lot of experience looking at consumers’ debt profiles compared to their earnings. They say that having some debt is manageable but that consumers get to a point where their debt compared to their income becomes unsustainable (anything over 30% of your take home pay towards debt is considered a problem). The survey revealed that 6 out of every 10 people are paying more than they can sustainably keep up towards their debts.
35 – 44 year olds were perhaps the most debt stressed (in the unsustainable debt repayment % band) and reported that they were having to help extended family members cover their costs.
The most stressed group was those that are traditionally identified as “middle class” and are earning between R20 -35000 each month.
How Do Debt Stressed Consumers Make Ends Meet Each Month?
With so many people feeling the pressure you may wonder what are people doing to deal with heir stress? Well, other than cutting their spending as much as they can:
13 % said they make use of loans (such as payday loans) to pay off existing debt and pay their bills.
8% are selling off assets and things to cover the cost of their debts.
11% are asking family to help pay their debts.
40% of the people surveyed simply feel stuck with their debt situation and do not have an idea of how to reduce their debt stress.
For those who are actively thinking about ways to deal with their debt, 21% of respondents simply don’t know who to trust about their financial situation. With the increase in scams and fraud, many consumers are hesitant to reach out to anyone for help.
What About Debt Review?
Debt review is a way for consumers to ask the courts to adjust their monthly debt obligations to something more manageable. It has been used by hundreds of thousands of South Africans since 2007 to make their lives more manageable.
When asked about the option of debt review about 25% said they do not know much about it. Interestingly, the majority of people said they ‘do not need debt review’ (which does not seem to match with their actual financial situation).
‘When asked about the option of debt review about 25% said they do not know much about it’
Diane Salters (a psychotherapist who Debtbusters have been speaking to about how consumers deal with debt) says this is because many have a fear or shame of asking for financial help in this way. It is still hard for people to talk openly about their debt situation. Some consumers actively avoid thinking and dealing with their debt, others get stuck and don’t know what to do and others find the topic makes them so unhappy they also do not want to deal with the situation*.
Its Easier Than You Think To Sort Out Your Debt Situation
Many consumers are shocked at the types of reductions they can get in monthly payments through the debt review process or by simply calling their credit provider and explaining their situation. If you don’t ask, you don’t get.
Rather than run away from dealing with your debt talk to a professional (who you can trust) who is registered with the National Credit Regulator (NCR) and get advice about your situation. There are often many options available to you to better cope with your debt stress.
*some over simplification here on our part for the sake of clarity and expediency
