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Johannesburg - Wishing price increases away won’t solve anything for South African consumers, but proper planning can do much to alleviate the problem, a debt expert said on Thursday.
According to Friedl Kreuser, debt expert at 6cents.co.za, a division of Summit Financial Partners, consumers must prioritise their debt so that they don’t fall behind on monthly payments and end up with tarnished credit records, court judgments, garnishee orders and repossessed assets.
Kreuser, one of Fin24’s debt experts, was responding to recent reports that the petrol price is putting enormous pressure on already indebted consumers.
He said that with 44% of South Africans struggling to keep up their debt payments as it is (statistics show that 44% of credit-active consumers have missed three or more instalments), it’s clear that the budgets of many South African households are already stretched quite thin.
As prices rise, it is important for consumers to adjust their budgets and spending accordingly.
“In order to make sure they have enough money available to pay their debts each month, consumers should first calculate their total monthly debt payments, and then simply make sure that these are always paid first.
“If consumers are struggling to pay their total debt payments each month, they should make more money available to pay their debts by finding creative ways to either increase their income or reduce their expenses,” Kreuser said.
Jason Garner of financial advisory company Acsis said that with the petrol price increases as well as the 8% hike in electricity tariffs, most consumers’ savings and debt levels will take a knock in the coming months.
It is clear that consumers are already struggling with high debt levels, with the Reserve Bank reporting that the household debt to income ratio was 76% in the third quarter of 2012, Garner said.
Debt Rescue CEO Neil Roets shared Garner's concerns, adding that the fuel price increase is going to be the last straw that breaks the camel's back.
A petrol price increase has a domino effect on the price of most goods and services, such as food and public transport.
So far this year, petrol is costing R1.32 and R1.34 more at the coast and in Gauteng respectively.
Roets warned that continuosly increasing price of fuel will push debt-ridden consumers into the hands of illegal loan sharks and microlenders.
Kreuser said that if consumers are genuinely unable to afford their essential monthly expenses and debt instalments, they should proactively make arrangements with their credit providers for reduced debt instalments they will realistically be able to afford.
It is important that any such payment arrangements should always be confirmed in writing.
“If their debt is severe and their credit providers are no longer willing to make voluntary arrangements, consumers should consider speaking to a debt counsellor to help them manage their debt through statutory debt counselling,” said Kreuser.
According to Friedl Kreuser, debt expert at 6cents.co.za, a division of Summit Financial Partners, consumers must prioritise their debt so that they don’t fall behind on monthly payments and end up with tarnished credit records, court judgments, garnishee orders and repossessed assets.
Kreuser, one of Fin24’s debt experts, was responding to recent reports that the petrol price is putting enormous pressure on already indebted consumers.
He said that with 44% of South Africans struggling to keep up their debt payments as it is (statistics show that 44% of credit-active consumers have missed three or more instalments), it’s clear that the budgets of many South African households are already stretched quite thin.
As prices rise, it is important for consumers to adjust their budgets and spending accordingly.
“In order to make sure they have enough money available to pay their debts each month, consumers should first calculate their total monthly debt payments, and then simply make sure that these are always paid first.
“If consumers are struggling to pay their total debt payments each month, they should make more money available to pay their debts by finding creative ways to either increase their income or reduce their expenses,” Kreuser said.
Jason Garner of financial advisory company Acsis said that with the petrol price increases as well as the 8% hike in electricity tariffs, most consumers’ savings and debt levels will take a knock in the coming months.
It is clear that consumers are already struggling with high debt levels, with the Reserve Bank reporting that the household debt to income ratio was 76% in the third quarter of 2012, Garner said.
Debt Rescue CEO Neil Roets shared Garner's concerns, adding that the fuel price increase is going to be the last straw that breaks the camel's back.
A petrol price increase has a domino effect on the price of most goods and services, such as food and public transport.
So far this year, petrol is costing R1.32 and R1.34 more at the coast and in Gauteng respectively.
Roets warned that continuosly increasing price of fuel will push debt-ridden consumers into the hands of illegal loan sharks and microlenders.
Kreuser said that if consumers are genuinely unable to afford their essential monthly expenses and debt instalments, they should proactively make arrangements with their credit providers for reduced debt instalments they will realistically be able to afford.
It is important that any such payment arrangements should always be confirmed in writing.
“If their debt is severe and their credit providers are no longer willing to make voluntary arrangements, consumers should consider speaking to a debt counsellor to help them manage their debt through statutory debt counselling,” said Kreuser.
6cents.co.za recently launched a free application for Blackberry and Android devices to help consumers manage their debts. This application can be found on both the Blackberry and Android app stores for free.
- Fin24
- Fin24
