The average debt per individual South African.

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In an article written by new24 earlier this year (2016), the article stated that South Africans were the biggest borrowers in the world in 2014.  We’ve all heard that the economy in the country isn’t great and that salaries are terrible, but to be given a title like that, is quite alarming.

In the second quarter of 2016, South African consumer debt has increased to R1.63 trillion, and with an estimate of 23.37 million credit active consumers, each South African’s estimate debt is just shy of R70 000.  If you have a home loans, you are immediately above this average.

Data captured from a debt management firm, also shows that 45% (10.5 million) of credit active consumers are struggling to meet their payments, and 60% of home owners are struggling to pay off their home loans.  Consumers are owing up to as much as three quarters (75%) of their monthly income, making it absolutely impossible for them to regain financial security, as all they are doing is paying off accumulative credit interest.

By now, consumers should understand the basic concept that one pays interest on top of the money loaned, so the minimum payment you are paying every month on your credit card, is mostly covering interest, which mean the fridge you bought can end up costing you double.  As hard is it may be, South Africans need to start practicing more discipline and stop spending money they do not have.  It is too easy to open an account and buy things, but just for one minute consider the consequences if for 1 month you do not get paid, how will you recover the following month?

As opposed to spending money in advance, rather get in the habit of saving up for the item and then purchasing it.  Keep in mind, to always start your children on the right financial path, children as young as 3 can already grasp the concept of saving and spending, read about it in our previous article Important Money Lessons To Teach Your Children.


2 thoughts on “The average debt per individual South African.

  1. Easier said than done.

    Firstly, salaries are pathetic, especially considering the amount of work people put into to earn an income. Some people work 2 or more jobs, and still it isn’t enough.

    Secondly, if the salaries are an ‘issue’ then there should be drive to lower living expenses. Debt isn’t just incured on house loans or fancy cars. People pay for food with credit cards for heaven sakes… This isn’t a consumer problem, this is a market and state problem.

    Thirdly, credit laws are a joke, as the agencies that provide credit still find ways to get accounts through even though they know they shouldn’t. Here, harsh penalties need to be enforced to nail the sharks, including the banks, for this horrible crime.

    Fourth, it is all good and well our state is run by a goon squad whom through one pathetic word or decision can tumble our economy into darkness. But when it recovers, businesses should also ‘recover’ to a stable consumer state. Too many businesses drive their prices hard, and keep them there. Another penalty system should manage this.

    Fifth, our banking system and monetary system should really open up its doors to the international community. Since the advent of the internet and global work or commerce, a lot of people could benefit from doing work in SA for overseas companies. But since it is an absolute pyn in the neck to receive offshore payments, this isn’t happening. Sure, the government wants its ‘cut’. But currently they are getting none either…

    Sixth, inflation is pegged at a relative rate, +-6%?, and yet fuel prices and other costs far exceed these rates. How can businesses be allowed to push for 25% plus rate increases year on year while having their own darn staff borrow just to survive?

    So many other issues that one cannot address this in a vacuum. This is cause and effect, the effect cannot be viewed in isolation.

    Liked by 1 person

    • Hi Rob, thank you for your resourceful respond and I can not agree more with all the aspects you have pointed out. The mere fact that many people at 30, are still paying their student loans is an indication that the working class is struggling. I know there is no quick fix, but I do want to focus my blog on reminding people on how, if possible, to be more financially responsible. Thank you again for responding, and please do keep reading my blog.


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