Fin24

Consumers owe more than R1 trillion

2012-10-18 16:35

Johannesburg - The total outstanding amount owed by consumers stands at R1.36 trillion, the National Credit Regulator (NCR) said on Thursday.

"This represents money owed by consumers in the form of mortgages, vehicle finance, credit cards, store cards, personal loans, short term loans, pension- and insurance-backed loans," the regulator said in a statement.

About 6 400 consumers a month had applied for debt counselling in the past six months.

Over R8.3bn had been distributed by payment distribution agencies to credit providers since July 2007.

These agencies are responsible for collecting payments from consumers and distributing them to credit providers, once debt has been restructured.

Out of 19.6 million credit active consumers, 53% were in good standing, while 47% had impaired records.

An impaired record was a record on which a consumer account was three or more months in arrears, which had an adverse listing, or which reflected a judgment or administration order.

Financial problems and over-indebtedness could be indicated by borrowing money to pay other loans, skipping payments in order to pay other accounts, or receiving a letter of demand or a summons from a credit provider.

Considering debt administration was another sign.

Consumers who had judgments passed against them, were absent from work especially towards month end, who were stressed about money matters or who regularly lost money to scams could also be in financial trouble.

"Over-indebtedness is a situation where money available after payment of essential expenses is not enough to pay all other debt," the NCR said.

This could happen when consumers took on more credit than they could afford.

A change in circumstances, such as retrenchment, could also make servicing debt more difficult.

"When consumers start facing financial difficulties, their first point of contact should be their credit providers," said NCR spokesperson Cornie Tema.

"They need to contact them as soon as possible to try and negotiate their monthly payments."

Consumers also had the option of applying for debt counselling, as set out in the National Credit Act.

Tema advised consumers to draw up a budget setting out income and expenses, including debt.

"Make sure you match each item on your expenditure list with the creditor you owe, and then compare the total of your monthly expenditure with your total monthly income. Remember your total expenses should not exceed your monthly income," he said.

Consumers should stick to a budget, which would help them keep track of expenditure, and keep account statements and receipts in a safe place.

Instead of skipping payments, they should negotiate lower instalments.

They should also consider the total cost of credit, not only the monthly instalment.

Tema advised consumers facing financial difficulties to cut down on lifestyle expenses.

"There are a number of expenses you can immediately cut or adjust in order to afford paying off your debts.

"You can cut down or adjust satellite television, alcohol, tobacco, domestic workers, club memberships etc. Comparing prices when shopping is also a step in the right direction."

Comments
  • Eterni80 - 2012-10-18 16:38

    that's about the same amount the ANC has stolen since they came to power...debit credit = square.

      gieljam.gomtor - 2012-10-18 18:10

      Agree and SARS keeps me so broke I cant even pay attention.

      claudia.meads - 2012-10-18 18:33

      The reality is rather that this is the STATS-SA (under command of the king - the ANC) lie about SA's inflation rate. It is one of the pivotal factors that led to Marikana and it is at the core of the SA consumer's level endebtedness - a situation that is fast spiraling out of control with the Rand on the verge of full collapse - ie to R10/US$ or even worse. STATS-SA lies about SA's inflation rate to create a false perception about the ANC regime's ability. Despite the SA consumer's best efforts to cut/save, they run progressively and exponentially short as the year winds down - hence the need for more credit and an augmented inability to serveice their ever growing debt. The working poor at eg Markinana (and aothers alike) are the most vulnerable. They are being made poor by the ANC's economic policies and not the mine bosses - the 'bosses' are simply a convenient decoy to give the incompetant ANC impunity. The reality is simple: the ANC will destroy SA.

  • Malose-Nyatlo - 2012-10-18 16:44

    Never -Never!\r\nSA's national past time.

      ernest.lwandle - 2012-10-18 17:00

      whats your point dude?

      Malose-Nyatlo - 2012-10-18 18:06

      Check the meaning of never-never Ernie. Everybody plays that - you might even find Zuma's name on the impaired list.

      ernest.lwandle - 2012-10-18 20:27

      DANKIE MFETHU iv got it now you buy it on long term credit

  • olebogeng.diratsagae - 2012-10-18 16:46

    dats huge

  • nuus.reeder - 2012-10-18 16:52

    Now what about when the land grabs start on the farms, with more than this amount being owed by farmers - complete economic collapse perhaps? Who will pay these debts?

  • Poloyatonki1.lee - 2012-10-18 16:54

    They must write it off....

  • ernest.lwandle - 2012-10-18 16:59

    did they also count their unreseonable intrests?

  • frank.vankaapstad - 2012-10-18 17:02

    47% with impaired records? That is insane! Consumers in this country really need to wake up. If you can't buy it cash, you shouldn't be buying it at all! I understand the need to finance big items like a house or car, but then you buy a cheap car and a modest house. You're a fool if you drive a flash car that the bank owns. Who gives a hoot what car you drive in any case? The key to financial freedom is to live debt free, yet somehow most people's egos and stupidity have them living above their means with borrowed money. It makes no sense.

      afrikeni - 2012-10-18 17:51

      Have you heard of leverage, good luck in saving R500 000 to buy a house. By the time you finish savig that house will be R850 000 and perhaps too old to enjoy the house / an asset anyway

      hjohn.marquis - 2012-10-18 18:49

      No bud, the key to financial freedom is not to live debt free or to save. The way to financial freedom as any truly wealth individual will tell you is to create wealth through investing. This could be through no debt, but in all likelihood this will never make you wealthy. You need to trade. Buy assets that have an investment yield but also capital appreciation. It is the only way.

      Sim.MzantsiAfrika - 2012-10-20 22:55

      I completely agree with you. South Africans have an expensive taste and they do get themselves in difficult financial situations unnecessarily just to show off. Quite the opposite to the likes of China where they have to encourage the citizens to spend as they are obsessed with saving, far cry from SA.

  • native.rsa - 2012-10-18 17:09

    @frank.vankaapstad I do give a s**t about the type of car I drive it must out accelarate a taxi and yes I'm included in the debt above

  • larry.piggott1 - 2012-10-18 17:12

    I owe a little bit of that!

  • nicola.jenvey - 2012-10-18 17:15

    There is good debt and bad debt. Good debt would be asset-building (home loans or investment properties) or credit card payments not yet due, but still recognised as debt. However, short-term debt accumulated because people live beyond their means is frightening - and the bulk of this is this type of debt. Savings is not a culture too many people have followed and that is detrimental.

      mark.peyton.90 - 2012-10-19 11:14

      Nicola, property now yields negative returns. The banks have effectively wrecked SA's decades-long No.1 investment category - this through the evils of securitisation and fractional reserve banking. The banking fraternity and the ANC have collectively wrecked SA.

  • johan.harlaar.9 - 2012-10-18 17:30

    1360000000:50000000 +272000 per person including home loans, car loans etc.. Ratio adults to children 1;3 means roughly 2 mil per house hold. That sounds a bit steep.

      native.rsa - 2012-10-18 17:53

      I agree given that not everyone in that number qualify for a credit loan

  • johan.hakunamatata - 2012-10-18 17:31

    What the government and economists fail to realize is that people are now borrowing money to simply make a living from day to day, therefore to purshase basic neccessities like water, food, housing, clothes and not luxuries!!

      faan.gerber - 2012-10-18 18:50

      If you have to borrow for basic necessities, how on earth do you intend to pay back the loan ? You have to find a way to survive with what you got (excluding a house and car).

  • afrikeni - 2012-10-18 17:56

    Looking at one side of the equation, how much have these people lend the banks in form of retirement nests, savings, investments. The equation usually balances, unless the debt was for pure consumption like holidays etc. I would like to know if people liquidate what thay bought with the debt, what shortfall will they have, thats the real problem NOT to quote gross debt!

  • mike.lamb.7777 - 2012-10-18 18:00

    @ Lwandle, I guess he's saying that we love to buy things on the 'never never'

  • duncan.gill1 - 2012-10-18 21:29

    What I have realized after many years in the wilderness is that you need to have disposal income,this means living within your means and that extra money you have at your disposal you need to invest.I would say that 10%of what your net take home income is you need to have free to invest.You can invest in many things but there is no better investment in the medium term than extra payments on the home mortgage,after that buy gold in the from of Kruger Rands and also collectible coins which are VAT free to buy and sell should be at least 25%of your investment portfolio and the other 75% should be split between Kruger Rands and extra payments on your home loan.In this way you should aim to have your home paid of in ten years instead of 20.

  • mikel.kiparski - 2012-10-18 23:27

    WE HAVE 5 MILLION TAX PAYERS against 20 million .... THIS DOES NOT ADD UP/someone who does not pay TAX gets credit????HOW DOES THIS WORK???

  • derekneilmaclachlan - 2012-10-19 07:36

    Stupid stupid people.....start buying what you need instead of what you want!!!

  • mlpetzer - 2012-10-20 12:04

    I would like these credit providers (especially banks) to review what was purchased with "credit". My mother had to use up her credit cards to buy FOOD- a taxable item? And petrol to get to work - a taxable item? And she is a single mother, my father has past and there is no "grant" that she can claim? So yeah where are we going with this? I agree with your argument Claudia_Meads, this is a downward spiral and when the government feels the pinch on their income they increase the inflation rate which HEAVILY affects the lowest level income earners hence strike action and downing of tools. We work to live NOT LIVE TO WORK! I must cut back on the little essentials I have (i.e. A SMIRNOFF once or twice a week) so that some lazy mother pumping out kids can claim a grant? Or some UIF dependent can claim their grant? You CANNOT multiply wealth by dividing it! EVERYONE should work and even pay R1 tax just to get flow back into the system so we can support each other not 1 million WORKING class to support 8 MILLION UNEMPLOYED? Then why don't we all stay home? I'll sell my house and live on the grant it seems easier that way!!!

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