Presented by NDA

The South African debt crisis – How to budget during a cost of living crisis

 ·12 Mar 2024

South Africa is facing a huge debt crisis with Finance Minister Enoch Godongwana’s latest budget revealing a worsening deficit from 4% to 4.9% of GDP.

This translates to R356 billion in additional debt-service costs, consuming a substantial 20% of the nation’s revenue.

As the nation reels from a cost of living crisis stifling economic growth, Head of National Debt Advisors Sebastien Alexanderson is concerned about the crippling effects of the shrinking economy on South African consumers.

“This relentless climb in debt service costs is throttling our economic vitality, and consumers need to arm themselves with robust budgeting strategies to survive these precarious times,” said Alexanderson.

He said the financial strain on consumers is palpable, with the latest TransUnion South Africa Industry Insights Report revealing many concerning trends, including a sharp 34.7% year-over-year increase in retail revolving accounts.

“With the cost of living on the rise, people are increasingly turning to credit to get by,” said Alexanderson.

“This significant spike in the use of retail credit accounts and other forms of borrowing indicates that many are struggling to cover their daily expenses in the current economic climate.”

Critical budgeting tips

To help manage these challenges, Alexanderson offers some straightforward budgeting tips:

  • Review your income sources: It’s essential to fully grasp your income, spending patterns, and saving habits. You should consider diversifying your income streams to bolster your financial resilience.
  • Appraise your expenses: Distinguish between variable and fixed costs to pinpoint and curb overspending.
  • Stabilise your finances through savings: Despite inflation, saving remains vital – and investing in interest-yielding assets can help preserve and grow your savings over time.
  • Run a flexible budget: Life’s unpredictability demands budget adaptability. Whether facing unexpected expenses or opportunities, the ability to adjust is key to financial stability.
  • Seek professional help: Seeking professional debt help is essential for anyone struggling with their finances.

NDA debt counselling

National Debt Advisors (NDA) offers a solution for those with overwhelming debt through its proficient debt counselling service.

This program, which is endorsed by the National Credit Act and overseen by the National Credit Regulator, offers a structured path to financial liberation for over-indebted South Africans.

From comprehensive debt assessments to protection against creditor harassment and asset repossession, NDA provides a critical support network for those caught in the debt trap.

The process promises to lower monthly instalments, reduce interest rates, and consolidate debts without resorting to further loans.

“Our goal is to enable you to live without the constant stress of debt – ensuring you can afford the essentials and, ultimately, have financial peace of mind,” said Alexanderson.

Contact National Debt Advisors today and begin your journey to financial stability.

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