As most companies pay-out bonuses to their employees at the end of February, which marks the end of the financial year, if you find yourself falling behind with your debt repayments it would be wise to use your bonus to settle some of your debt.
21 January 2016
Many South Africans are holding out for January’s pay date on the 25th or 26th of this month.
The temporary feel good atmosphere from the festive season has started to lift and the countdown to the end of the longest month (six weeks with no pay) has begun.
Wendy Monkley, Head of Marketing at DebtBusters says, “The day after January’s pay day will be the most shocking day for many South Africans. This will be the day that money comes in and goes straight out, and for many we expect they will find themselves left short with no money for living through February. I am extremely concerned that consumers with high levels of debt are headed towards serious cash flow shortages in 2016.”
DebtBusters latest Q3 Debtometer Report reflects the current economic difficulty which shows that clients require 102% of their net income to service their debt before paying for any living expenses.
“The recent weakening of the rand, tighter monetary and fiscal policy and inflationary pressure has us headed towards a hike in the repo rate on the 28th of this month. A repo rate hike after a pay day that already doesn’t fully cover debt repayments and living expenses is going to be the tipping point for many families,” says Monkley.
With immediate effect, as soon as the Repo rate is hiked, consumers will need to absorb increases in all debt repayments including home loans, vehicle finance, credit cards, overdrafts, personal loans and store cards. “A hike in the repo rate impacts homeowners hardest, however, lower income earners that don’t own properties will also feel the knock-on when homeowners increase rentals to cover their financial exposure,” adds Monkley.
On top of this, food prices are expected to sky-rocket as a result of the worst drought South Africa has experienced in 111 years, Eskom is calling for a 16% electricity tariff increase and penalties are being levied on over consumption of water.
“We haven’t even begun to see the impact that all of these forces are going to have on individuals. South Africans are bound to experience a huge sense of failure during this time. They have to buckle down and get real with their finances, cut costs wherever they can and manage their Debt,” ends Monkley.
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For further comment kindly contact:
Head of Marketing, IDM Group.
Cell phone: 083 564 8702