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Under pressure: Do these 6 things to dig your way out of debt

More than 50% of South Africa’s credit-active consumers are over-indebted, according to a recent report. Picture: Wirestock/Freepik

More than 50% of South Africa’s credit-active consumers are over-indebted. This means that they do not have the financial ability to pay all their monthly debt repayments at the end of a month.

This shocking figure emerged from a recent report compiled by Genesis Analytics in partnership with the Financial Sector Conduct Authority.

Over-indebtedness, according to the report, remains a challenge for South Africans and is linked to economic conditions that were exacerbated by the Covid-19 pandemic.

The report shows credit-active consumers spend their borrowings on clothing, food, bills and monthly fees.

According to the report, other factors that impact the ability of people to pay debt include slow economic growth, high unemployment and the rising costs of petrol and food.

Sebastien Alexanderson, founder and debt counsellor at National Debt Advisors (NDA), shares three ways you can manage your debt.

– GET A CREDIT REPORT: Ensure you know what is reflected on your credit report. A credit record is a detailed, objective account of a person’s credit transactions that determines their credit score.

“There is practically no use in applying for a loan if you have a credit report filled with judgments and bad payment history,” Alexanderson said.

– KNOW ALL ABOUT REPAYING NEW DEBT: Know the interest rate, the repayment terms, and monthly instalments of the new debt you are taking on. Knowledge is power and you are then not blindly taking on debt you will not be able to service.

– INSURANCE: Make sure you have credit life insurance in the case of death, disability, and retrenchment.

Alex Ollewagen, a client solutions actuary at Metropolitan, shares another three ways that people can manage debt.

– HAVE A BUDGET: Draw up a budget with all your income and expenses to manage your money properly. Without a budget you will have no idea where all your money is going or what money “leaks” you may have.

– SET UP A LIST OF OUTSTANDING DEBT: It is important to have a view of your debt by listing all outstanding payments that you owe.

– SEEK PROFESSIONAL HELP: Speak to an accredited financial adviser to help you with money matters and managing your debt.

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