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Most South Africans Run Out Of Money Half Way Through The Month

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Running out of money is a hardship that many South Africans have faced at one point or another. Many face this type of financial distress each and every month. Recent food price increases, unemployment and rising transport costs have only added to the financial pressures of consumers. A recent survey, the World Wide Worx “More Month Than Money” commissioned by ThymeBank reveals more.

BusinessTech reports:

“We know that many South Africans struggle to save, but through sharing the insights from this study, we hope to help consumers take control of their money so they can work towards their goals and reach their full potential,” said Tauriq Keraan, deputy CEO of TymeBank.

The survey found that 76% of South Africans run out of money before the end of each month. This staggering amount shows how widespread the problem is. There is often the misconception that only the poor are struggling, when in fact middle and upper class consumers are facing the same issues.

Where Is The Money Going?

The survey found that salaries are mostly being used to cover the usual expenses such as housing, groceries and transport. The shocking statistic was that 40% are spending between 41-100% of their income on servicing debt. This debt includes bond repayments, loans, credit cards, store cards and vehicle financing.

“After paying these big ticket items, 57% of us don’t make it much further into the month; by the 15th we’ve run out of money and are back to borrowing. This makes us feel frustrated (51%) and helpless (35%),” the report said.

These are similar feelings to those that we witness at Vantage Debt Management on a daily basis. Consumers who are battling to make debt repayments approach us for help. Often, we are the first people that they speak to when the banks and creditors stop lending them money.

How Can The Debt Cycle Be Stopped?

A debt cycle occurs when a consumer runs out of money before payday and resorts to borrowing to make to through the rest of the month. By borrowing more each month, their debt repayments continue to grow and the cost of interest and fees increases. Due to this debt cycle, we speak to hundreds of consumers each month whose debt installments take up 80% or more of their salaries.

The best way to stop the debt cycle is to speak to a debt professional. Debt counsellors are able to assess your financial position and determine your best course of action. Sometimes budgeting or saving tips are required, but in most cases the over-indebted require debt counselling.

Debt counselling breaks the debt cycle by instantly reducing your monthly debt repayments by up to 60%. This is done by formally negotiating with each credit provider to reduce installments and interest rates. The installments are dropped by stretching the repayment term. Although it will take you slightly longer to pay back the debt, at least it would be affordable for you and would break the vicious debt cycle.

(Report Source: BusinessTech)

 

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