Middle-aged South Africans are the most indebted population group, accounting for 53% of the overall R1,64 trillion owed to creditors, reveals new data by Debt Rescue
If you’re between the ages of 31 and 45, the chances are high that you’re drowning in debt.
This is according to internal data collated by debt management company Debt Rescue. It also found that there’s very little difference between men and women when it comes to debt with men accounting for 49% of the country’s collective debt while women are responsible for 51% of the total debt owed to creditors.
Perhaps the most disturbing aspect of Debt Rescue’s figures is the fact that over half of all indebted consumers spend at least 75% of their monthly incomes servicing debt.
Furthermore, just 23% of South Africans have some money left over at the end of the month, while the rest have nothing.
As a result, the number of consumers who are seeking debt counselling from the firm has grown by more than 40% year-on-year, says CEO Neil Roets.
“This is clear evidence that a growing number of consumers are getting even deeper into debt and need help from debt collectors to get out from under the debt mountain most of them have accumulated over the past years,” Roets was quoted saying a Business Tech report.
The data also reveals that personal loans, followed by credit cards and store cards are the areas where outstanding consumer debt is most concentrated.
The problem, Roets says, is that too few South Africans are actually knuckling down to tighten their belts in the face of rising inflation, food and petrol prices, electricity tariffs and interest rate hikes.
A World Bank report released earlier this year found that South Africans are the world’s biggest borrowers, with 86% of South Africans having acquired debt, followed by Iranian consumers with 71%.
“When we sit down to discuss the extent of our clients’ indebtedness, we usually ask them in broad terms what the money was spent on and it is absolutely shocking how much of it was spent on luxuries and non-essentials,” Roets says.
“One of the items that we consider to be an essential, a home mortgage, came in stone last at 19%.”
Statistics released by the National Credit Regulator show that around 10,26 million South Africans hold accounts that are three months in arrears and are technically defined as over-indebted.
Debt Rescue data also indicates that the number of debt review applications has grown by 182% year-on-year, with more men applying than women.
The debt management firm also noted a marked increase in the number of young consumers aged between 21 and 25 applying for debt review – up a whopping 214%.
Roets puts this down to poor financial education and a tendency to overspend and splurge on luxuries and material goods.