I have always somehow been involved in the debt industry over the last two decades – and I have gained a lot of insight into South Africans and debt.
Mense, you may disagree with me all you like, but through experience, I know the following to be true:
The lack of education and information – specifically when it comes to the rights, options and legal process around debt – is a huge contributor to the debt burden of South African Consumers.
The denial, guilt, shame and fear of judgement surrounding debt is a huge stumbling block to talking about it, finding solutions for it and getting rid of it.
Overwhelming and unmanageable debt does not only have a financial impact on the individual, their relationships and their families – but an emotional, physical and mental impact as well.
South Africans with debt fear their creditors and their attorneys, and have no idea how to communicate with them. Autobots, voice recordings and lack of physical connection is not making that any easier.
Some people get into debt to impress others. Though these days, many people are getting into debt just to survive. We are buying bread on retail store cards and paying for petrol with our credit cards. Most people simply can’t get through the month.
We need the micro-lending industry to be regulated. Too many people (even those on social grants) are paying exorbitant fees and staggering interest rates, while regulators and ombudsmen simply look on.
Nowhere near enough is being done to address the debt problem we have in this country.
All of the above, make me welcome findings from DebtBusters’ second annual Money Stress Tracker. This is one of the largest surveys about how financial stress affects other aspects of South African’s lives.
There were over 35 000 respondents to the 2023 online survey, conducted among a representative sample of South African consumers who are currently not in debt counselling.
According to the Money Stress Tracker, of the 78% of respondents who said they feel money-stress (up from 70% in 2022), 94% said it was impacting their home life, 78% their work life and 77% believed it was affecting their health – a clear indication that money stress results in other types of stress.
Short-term concerns continue to be the main reason for this stress. Half the respondents said running out of money before the month-end was their main worry. As one put it: “There’s more month than money.”
Other interesting facts revealed in the Money Stress Tracker include: People who are younger and with lower incomes feel the most stressed and anxious about money, although stress levels in respondents aged between 45 to 54 showed a 23% increase compared to 2022.
To deal with money stress all age groups said they were cutting back on spending, a strategy that on average 44% of respondents have adopted. This year 38% said they were looking for a better job or higher pay, up nearly 50% on last year.
Younger consumers and those in the lower-income bands are more likely to be looking for a better-paying job. Younger consumers are also 1.5 times more likely to set a budget and stick to it.
While all respondents said the biggest money stress factor was running out of money before the end of the month, the next concern for people who were 55 years or older was having enough to retire. People between the ages of 25 and 44 were more worried about paying off debt.
When asked why they haven’t acted to relieve money stress, the majority of under 35-year-olds said they feel stuck or embarrassed. Those aged 45 and up say they don’t know who to trust or want more time to think. The survey found that less than 15% of people with unsustainable monthly debt repayments take any positive action.
Compared to 2022 both women and men are 10% to 15% more stressed about their finances, work life, home life and health. Four out of five female respondents said they suffered financial stress.
This year, interest rate increases featured for the first time as one the main contributors to money stress. The other top reasons were unexpected expenses, inflation and living costs, the impact of load shedding, school fees and retirement.
In terms of income bands, those earning less than R5 000 a month were most stressed about paying debts and school fees. Those earning R35 000 or more, were the most concerned about interest rate increases.
“This indicates that the highest earners feel the impact of rising interest rates on their financial situation,” explains Benay Sager, head of DebtBusters.
One thing that the DebtBusters Money Stress Tracker shows, is that most people – in low, middle and high income brackets – are experiencing some form of financial stress right now.
On a personal level, it pains me greatly that I don’t have the time and resources at my disposal to assist all the requests I get for financial guidance, debt and product related.
I hope that one day there are will be platforms available to adequately assist and address the information needs of those struggling with debt and needing help with their finances.
Creditors need to learn that hiring expensive actors to insincerely read messaging from scripts is condescending, and not what is needed in the debt crap storm South Africa is in the middle of right now.
The full Money Stress Tracker is available to view here: https://www.debtbusters.co.za/articles/debtbusters%E2%80%99-money-stress-tracker-2023-finds-south-africans-financially-fatigued/.
dailyvoice@inl.co.za