08 Feb Debt Stress of 2020
With the recent New Year celebrations now only a dim memory and January already over, most South African citizens have returned to work and their daily routines, which for many of us involves revisiting the financial pressures of the year before. While the start of a new decade should signify hope and new beginnings, the Debt Stress that is expected for the year 2020 has us feeling far from optimistic.
Our country has been facing excessive debt related problems for the past few years, as South Africa’s economy fails to improve and jobs become harder to find. The frightening reality that so many individuals rely on their credit cards or accounts to make it through a month shows that we’ve gotten comfortable living beyond our means. Though it might provide short term relief to struggling consumers, counting on credit to splurge over Christmas or afford a family holiday is only going to make your situation worse.
For the majority within low to middle income families, the debt-to-income ratio is massively out of proportion and continues to worsen as our economy shrinks and unemployment rises – our current unemployment rate is approaching 30%. With impending recession posing a very real threat, it is concerning that so many consumers have made no adjustments to their spending or curbed their unrealistically high standards of living. Retailers continue to encourage shoppers to indulge, while every few months a newer and better cellphone or TV hits the market.
As we spiral further down the dark hole of debt and financial strain, it becomes harder to see the light, but there may no longer be an option as 2020 is looking to be another difficult one. This year, we are facing a possible electricity price increase of a whopping 17% percent, despite consistent load shedding. Load Shedding also makes it almost impossible for new and small business to thrive and grow in South Africa, which can effectively strengthen our fragile economy, create employment opportunities and help turn things around. Unresolved debt leads to mental and physical strain, while also leaving its mark on your loved ones over time.
With unsettling outcomes projected for Debt Stress in 2020, it is more vital than ever that careful spending and proper budgets be actioned. A vicious but unchanged cycle of rising debt from household to household and even within our own government means that we are very close to being downgraded to junk status, also known as “non-investment grade speculative”, which means that any potential financial aid from other countries will cost our country more, weakening our currency further and in turn causing massive price hikes on everything from basic groceries to medical aid, property prices and petrol.
To gain control of your finances and unresolved debts, check in with our skilled Less Debt team today. At Less Debt, our qualified team of financial experts work with various clients who are seeking to overcome their debt stress and change their spending habits. We urge consumers to approach 2020 with caution as far as their finances are concerned, making provisions for emergency funds to get through tough times. Our team provides effective Debt Review and Debt Counselling services to South African consumers that uplifts their money mindset and promotes living within a budget and staying clear of debt.