Minimal salary increases, rising unemployment and increasing living expenses are putting added pressure on South African consumers. High levels of personal debt and strained finances make these times even tougher. Our national household savings rate is so low that some even consider it to be negative.

Why do so many South Africans use debt?

There are over 26 million credit active consumers in South Africa. In an ailing economy, many consumers are forced to make use of debt. Personal loans, credit cards, store cards and overdrafts are used for basic living expenses. Sometimes there is no alternative. Without access to these forms of debt, consumers would fall behind on rent payments, subscriptions, contracts and not have enough money for food, transport or electricity.

How do you know when your debt levels are dangerously high?

Using too much debt is something that we all try to avoid. When your monthly debt repayments become too high, you may be over-indebted. Over-indebted is when your income is not enough to sustain your debt repayments and living expenses. If you finding it difficult to make it to month-end on your salary, you may need to make drastic changes.

Often, over-indebted consumers use debt to pay off other debt or they fall behind on repayments. Both of these actions can have negative impacts on your personal credit score. If more than half of your salary is going towards debt repayments, you could be heading into trouble.

What options exist for over-indebted consumers?

If you think you are over-indebted you should take immediate action. Delaying looking for help may cost you lots of money in the long run. It is best to speak to a debt counsellor to assess the situation.

A debt counsellor can tell if you need to adjust your budget or require a formal debt solution. Debt counselling assists by reducing monthly debt repayments and interest rates. This makes the debt more affordable in the short and long term.

Debt counselling can also help you to retain your home and car, while repaying your debt. Your credit score can also improve while you make consistent payments each month.