More Debt than Savings

According to the Savings Institute of South Africa household savings as a percentage of disposable income was at a high of 13% in 1979, but has been on a steady downward spiral to being at an all-time low of less than 1% in 2008. By the same token, household debt in 1979 was at an average of 36%, but is now at an all-time high of 76%. The reasons for this are many and varied, but include influences such as high inflation, instant gratification (wanting it now, rather than saving and buying it later), and a rising tax burden.

The result of this shift from a society who saves to a society who is over-burdened with debt is that households and individuals will find that they are struggling to meet the repayments on their home loans, vehicle loans, credit cards, and other debts. If you find yourself struggling to keep your head above water (like many others – you are not alone) then it might well be time to ask for help. The first step that you should take in climbing the ladder towards freeing yourself from over-indebtedness is to assess how much you owe.

Take a piece of paper and a pen and write down an honest list of all of the debts that you have. Include all the small amounts that you might owe to this one or that. Once you know what the total amount owing is you will be able to realistically deal with settling this debt. You could perhaps separate the necessities (car and home) from this list and then concentrate on the balance. Armed with this list you will now need to go shopping! No, not that kind of shopping (you have enough debt already); you need to find a reputable company or bank at which you can apply for a debt consolidation loan.

There are a number of options available to you. These include an extension on your home loan (provided there is equity in the property, i.e. the value of the property exceeds the loan amount) or you can apply for an unsecured loan (meaning a loan against which you do not have to supply collateral or security in the form of surety-ship or property). You might need to approach a few institutions before you find the right loan for you needs. Once you have secured the loan make sure that you pay off all of the items on the list you created and stick to you repayment terms. Slowly but surely you will see the original amount being reduced, and what a wonderful feeling that is. Once your debt has been repaid you might consider looking into beginning saving money as opposed to creating debt.