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South Africans Are Struggling To Pay Their Bills

The Covid-19 Pandemic, lockdowns and subsequent economic fall is hitting countries worldwide and people are struggling to cope. Here at home in South Africa, this is being felt in a big way as job losses continue. Thus far millions (estimated around 3 million) of people have lost their income and their families who were reliant on them for income have been hard hit.

It is no surprise that people are struggling to repay their debts. Already pre Pandemic, around half of all South African credit users were up to 3 months behind on repaying the people they owe. This figure can only have grown (though the banks have given a lot of people payment holidays which tends to hide the real impact).

‘pre Pandemic, around half of all South African credit users were up to 3 months behind on repaying the people they owe’

A Rather Revealing Survey

One of the large credit bureaus (TransUnion) have done some research into how consumers are coping and focused on asking people how they are trying to repay their debts. The bureau spoke to over 1000 people during November.

Here are some of the results which gives us a glimpse into what is happening and how people are dealing with the situation:

79% say they are currently being seriously financially impacted by Covid-19 (despite lockdown levels having dropped to level 1)

11% said their financial plans for 2020 are on track even though the pandemic hit. The majority said their plans flew out the window pretty early this year.

85% of those in the survey said they are worried about their ability to repay their credit providers and 29% of those who took part said they expect to not be able to repay their credit providers during December.

Out of those who said they are stressed about repaying their credit providers, most are trying to repay at least some of their credit providers some of the time. On average though this group says they need an additional R7400 a month to pay their credit providers what they are demanding. They are basically not earning enough or have over committed by this large amount.

‘they need an additional R7400 a month to pay their credit providers what they are demanding’

42% of those in the survey said they are currently dipping into retirement funds or cashing in investments in order to stay afloat and repay their credit providers so far this year.

While everyone has had to be more cautious in spending this year and almost all have cut back on spending, over 43% of South Africans have specifically cut back on some sort of subscription service or membership to try free up funds to get by each month. Many have also reduced retirement contributions or taken severance packages to make ends meet.

16% say they have started a new form of employment this year. This will assist them greatly in being able to cover their costs and service their debts.

More Debt to Pay off Debt

One of the many worrying stats to come out of the survey is that 17% of those surveyed said they went out and got new loans to help them pay for their existing loans. This is of course much like trying to dig your way out of a hole (the hole just gets deeper and deeper).

‘they went out and got new loans to help them pay for their existing loans’

R7400 Short But Hopeful…

Despite being on average R7400 short each month, almost 70% of those in the survey said they are ‘optimistic’ about the future, perhaps based on progress worldwide with regard to vaccines for Covid-19 and not understanding how long that will take to help or perhaps just blind optimism.

If you find yourself short of what your credit providers want with little or no realistic hope of finding the extra funds each month then you should first talk to your credit providers about adjusting what they are asking each month. You may want to send some motivating figures along with your formal request (best done in writing if possible).

If that doesn’t work or if you feel intimidated by the prospect then why not talk to a Debt Counsellor about options you have (such as debt review) to repay your debts more manageably or realistically?