By Steve G
With levels of debt in South Africa on the rise, more and more people are exhibiting the common signs of a personal debt problem.
As recession grips South Africa, more and more consumers are at risk of accumulating personal debts they are unable to repay. The resultant debt spiral, accompanied by the shock of a 0.7 percent contraction in the economy in the first quarter of 2017, means more than 10 million consumers (over 50 percent of economically active South Africans) are now over-indebted.
Debt, per se, is not necessarily a bad thing. When used sensibly it can help us pay for life’s essentials like housing and vehicles. But being over-indebted, defined as being in arrears on at least three payments, is symptomatic of a real debt problem. So what are the signs that rather than managing your debt, you’re starting to develop a debt problem you can’t handle?
1. You only make the minimum repayments
One sure sign that your debt is starting to reach unsustainable levels is when you resort to making the minimum credit card repayments simply because you can’t afford to repay more. In this case, all you’re doing is paying off the interest every month and never actually tackling the capital amount. In some cases, people seek fast cash from a lender like Wonga to repay one debt, only to replace it with another debt. If you recognise this behaviour then you could well have a debt problem.
2. You receive regular threats from creditors
It is common for those who are struggling with their debts to leave payments right until the last minute. In doing so, they will often receive threats from utility companies, broadband providers and other creditors that legal action will be taken or their supply will be cut off. In many cases, there simply isn’t enough money to make the payment at the end of the month. That then creates a ‘rob Peter to pay Paul’ scenario, where money is scraped together to pay one supplier at the expense of another. This is a precarious balancing act that is only sustainable for so long.
3. You’re in denial
Rather than facing the reality of your debt problem, you take the approach that ignorance is bliss and avoid looking at your bank balance and leave bills and payment demands unopened and hope that it will all go away. Unfortunately, it won’t. Burying your head will only make the situation worse and cause you to miss opportunities you may have to start turning your position around.
4. You have no idea how much you owe
One clear sign that your level of debt has become a problem is having no idea how much you actually owe. Similarly, not knowing how much interest is being charged by each of your creditors shows that you do not have your debt problem under control. If you did, you’d identify the most expensive debts and put a plan in place that allows you to repay those debts first.
Solving your personal debt problem
If you recognise these common symptoms of a debt problem in yourself then it’s time you did something about it. The first step is to search for reputable and free sources of advice. This article is an excellent place to start.