Guiding consumers since 2009

Be warned of the debt trap

By Staff Writer

According to data from Statistics South Africa, employment contracted by 1.3% or 171 000 jobs between the fourth quarter of 2009 and the first quarter of 2010. The year on year picture, shows that 833 000 jobs have been lost over the past year.

According to the National Credit Regulator's statistics, there are over 18 million credit active consumers, of these, 45% have impaired records. A consumer is classified as having an impaired record if he/she has three or more payments in arrears, or has an "adverse listing", or a record that reflects a judgment or an administration order.

To date in excess of 170 000 consumers have applied for debt counselling. The scenario therefore is set for employees to exercise extra caution about how they handle their finances.

It is definitely time to settle old debts, drastically reduce new ones, and control budgets with a firm hand.

"Both employees and their employers should be concentrating on a combined effort of promoting wise financial management," stresses Peter Setou, Senior Manager: Education and Strategy at the National Credit Regulator (NCR).

"The NCR is continually educating and informing consumers/employees on the role of the National Credit Regulator, objectives of the National Credit Act, consumer rights under the NCA, debt counselling, credit bureaux, budgeting, dealing with over-indebtedness etc. However, our success will be limited if there is no active support and participation from both employers and their staff."

Setou strongly advises employers to include educational programmes on managing finances and dealing with over-indebtedness into their organisations' wellness programmes.

Employees are also urged to make use of these services offered by employers.

"It is common knowledge that stress-related illnesses have a markedly negative impact on productivity, therefore employers should assume the responsibility of advising their employees on where they can obtain assistance. When, for example, employers note a rising incidence of garnishee orders within the organisation, they should take proactive steps to point employees in the right direction for advice and counselling."

Employees who already find themselves in a position where money available after payment of essential expenses is not enough to pay all other debts must act immediately because the chances are that they may be over-indebted. The first step is to approach their credit providers and negotiate lower instalments. In most cases credit providers are willing to assist. If this fails they need to contact a registered debt counsellor.

Recent Articles

Featured It’s possible to change your marriage regime

Many people wed before they sign an antenuptial contract (ANC). This is especially practiced by people in customary marriages and those not clued up about the ANC. The law says if there’s no ANC before the wedding takes place, the marriage will automatically be in Community of Property. 

Keep this in mind when taking out new financial products

Adding a product to your personal finance portfolio, such as insurance or an investment, is a big decision. We found out what you should keep in mind before taking out a new product, how you can assess the products you already have, and how you can generally improve your financial position.

Are you in debt denial?

With debt levels increasing at 13% more than income levels, South Africans are more debt-stressed now than arguably ever before. This is iterated by the National Credit Regulator’s (NCR) report that nearly half of credit-active consumers in South Africa have damaged credit records. However, only a few seek the necessary help.

Why should you invest in a mutual bank?

Often when people think about banking, they always think about commercial banks. Mutual banks hardly come to mind, but these banks offer investment opportunities that are often overlooked.

 

Deals

Aurora Spa 100-minute Treatment Special

Price: R449
When: Until 31 March
Where: Century City

Woodstock Grill and Tap Steak Thursdays

Price: R100
When: Thursdays
Where: Woodstock

KFC 5+5 Special

Price: R65
When: Until 25 February 2020
Where: Nationwide