Most South Africans want to save for their retirement, but the reality for many middle-income earners is that once they’ve paid for essentials most of what’s left is spent on repaying debt, says Benay Sager, head of DebtBusters. Read the full article on BusinessTech; we include an extract below:
Sager said that debt repayments now make up a substantial portion of what consumers need to spend, making saving difficult, if not impossible.
The company’s most recent quarterly Debt Index found that people applying for debt counselling with take-home pay of over R20,000 per month spend 60% of their monthly net income servicing debt. Their total debt-to-income ratio is over 130%.
While in other countries the total debt-to-income ratio is similar, most of the debt in other countries is low-interest bond debt – in South Africa, most of the debt is high-interest unsecured debt.
Sager said there are a few reasons for this. Real incomes have declined by 17% over the past five years as a result of inflation, while the latest CPI numbers will exacerbate the situation.
Read the full article on BusinessTech.