Take back your financial freedom

By Staff Writer

 

Many South Africans will celebrate freedom day tomorrow (27 April) while shackled to their debt.
This is according to Sylvia Walker, market development manager at Old Mutual. She added that millions of South Africans who earn good money battle with short-term debt.

The Old Mutual Savings and Investment Monitor found that many breadwinners see debt as unavoidable and this perception is reinforced by rising expenses like transport, food and electricity.
 
Shepherd  Silayi,a debt counselor consultant at Credit Matters, said many people are dependent on loans just to sustain their day-to-day needs.
“Short term loans are appealing because they have lower interest rates but it can become problematic for people who end up taking a loan to pay off another loan,” said Silayi.
 
Walker added that while we must definitely celebrate our democratic freedom, Freedom Day is also an important opportunity to make sure that people know their financial rights and assert them, while also exercising responsibility over their own financial freedom.
 
“South Africa’s consumer protection laws are very robust, but many consumers simply aren't aware of the extent of that protection. It’s important that people firstly, know their rights and recourse and secondly, feel empowered to take control of their money,” said Walker.
 
Born-free generation’s debt
 
Many of those who grew up free from oppression find themselves enslaved by “now-ism” (an access to easy credit that drives a buy-now-and-pay-later mood). 
“It has resulted in a debt-to-income ratio of nearly 80%. In other words, for every rand South Africans spend, 80 cents goes toward servicing their debt,” said Walker.
 
Silayi added that a lot of debt made by the younger generation is driven by a need to live a certain lifestyle. As a result many of Credit Matters’ younger clients need help consolidating debt caused by loans, credit cards and clothing store accounts.
 
Don’t drown in debt
 
To live a debt-free life requires serious action and it starts with drawing up a budget. According to Walker many South Africans simply don’t know exactly how much they earn or how much they spend. You must establish how much money comes into your account each month and where it goes.
 
She also recommends paying off your most expensive debt first. These include shop cards that charge the highest interest rates. “Once you have cleared your debts and are operating on a cash basis, you can start thinking about investing your money for important goals, making your money work for you, instead of you working for your creditors,” said Walker.

Recent Articles

Featured Applying for a home loan? Consider the repo rate

When you apply for a home loan, one of your top priorities should be to secure a low interest rate. In order to achieve this, you need to be familiar with the repo rate. We find out more about this.

Effective financial planning as a single parent

As a single mom or dad, it can be challenging to keep up with the ever-increasing expenses of raising a child. We have a look at the importance of setting up a budget as a single parent.

How your credit score impacts your insurance – and vice versa

Since insurance is paid in advance, it may seem unrelated to your credit score. However, these two are in fact linked to one another. We find out why insurers look at your credit score.

Should you share finances with your cohabiting partner?

When you and your partner decide to move in together, you need to work out whether it would be better to share your finances, or to continue to operate separately.

Deals

Get a FREE flight ticket with Hotel Sky

Price: From R5,200
When: Until 31 January 2022
Where: Johannesburg and Cape Town

Voucher for 2 special at Bakwena Day Spa

Price: From R1,798
When: Until 31 January 2022
Where: Centurion, Hartbeespoort and Stellenbosch

Spier Hotel Summer Special

Price: Available on request
When: Until 31 March 2022
Where: Stellenbosch


Latest Guide

Guide to debt rehabilitation solutions