{"id":785283,"date":"2024-08-02T16:00:00","date_gmt":"2024-08-02T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=785283"},"modified":"2024-08-02T16:10:02","modified_gmt":"2024-08-02T14:10:02","slug":"r21700-per-month-blow-to-rich-south-africans","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/785283\/r21700-per-month-blow-to-rich-south-africans\/","title":{"rendered":"R21,700 per month blow to rich South Africans"},"content":{"rendered":"\n

Wealthy South Africans have the highest levels of debt and are currently spending, on average, R21,700 per month on home loans, vehicle finance, credit, and other forms of debt.<\/p>\n\n\n\n

This is according to consumer analytics and research firm Eighty20, which aggregates its data from 42 million adult South Africans representing over R3.7 trillion in earnings per annum.<\/p>\n\n\n\n

The wealthiest 5% of the population possesses more assets than any other segment. <\/p>\n\n\n\n

Their current debt load is more than three times that of the middle-class workers segment. <\/p>\n\n\n\n

According to Eighty20, these individuals are classified as Heavy Hitters. <\/p>\n\n\n\n

They have the highest incomes of any segment and, as a result, need to be divided into seven sub-segments with an average monthly income ranging from R30,000 to more than R120,000.<\/p>\n\n\n\n

Many affluent individuals bought assets on credit when interest rates were low. <\/p>\n\n\n\n

However, with interest rates rising and high inflation, lower to middle-income groups are starting to feel significant financial strain. <\/p>\n\n\n\n

According to the firm’s latest data, this group, which includes large families and represents less than 10% of the population, holds two-thirds of vehicle asset finance (VAF) loans and three-quarters of home loans by value. <\/p>\n\n\n\n

Eighty20 highlighted that these South Africans, with a take-home pay of about R42,100 after tax, have unsustainable levels of debt in the second quarter of 2024. <\/p>\n\n\n\n

The company noted that this group holds around 30% of all home and vehicle asset finance (VAF) loans in South Africa despite representing only 20% of the total loan value.<\/p>\n\n\n\n

For a typical affluent individual, debt repayments account for 66% of net income, with two-thirds of their debt secured. <\/strong><\/p>\n\n\n\n

Eighty20 pointed out that households in this group spend R21,700 on home loans and vehicle asset finance. <\/strong><\/p>\n\n\n\n

This also includes unsecured debt, which is debt created without any collateral promised to the creditor.<\/p>\n\n\n\n

Many lenders note that this tends to be credit card debt and personal loans used to cover monthly expenses.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Standard Bank advises that if your debt-to-income ratio is higher than 43%, you should consider strategies to reduce your debt. <\/p>\n\n\n\n

Benay Sager from DebtBusters is more cautious. <\/p>\n\n\n\n

“In our experience, if the ratio of debt repayment to net income is over 30%, the consumer is in the danger zone. If it’s over 40%, then their financial situation is not sustainable, regardless of the type of debt they are repaying.” <\/p>\n\n\n\n

According to these thresholds, when the ratio is at 66%, wealthy South Africans are considered to have unsustainable levels of debt. <\/p>\n\n\n\n

The firm attributes this trend of unsustainable debt levels to higher borrowing costs, a high cost of living, and stagnant and generally low salary growth over recent years.<\/p>\n\n\n\n

What’s worse, DebtBuster mentioned that people in this income bracket have the highest number of individuals who believe they don’t need debt counselling\u2014over 73% of them, to be exact. <\/p>\n\n\n\n

The research clearly shows that older people with higher incomes are under the most pressure to repay debt, yet they are the most resistant to seeking help. <\/p>\n\n\n\n

Additionally, Standard Bank has warned that many South Africans earning over R25,000 struggle to save money for emergencies. <\/p>\n\n\n\n

According to Standard Bank data, over half (52%) of entry-level private banking clients have less than one month\u2019s salary saved for unforeseen circumstances, such as retrenchments or urgent medical procedures.<\/p>\n\n\n\n

\n\n\n\n

Read: Your bank account isn\u2019t safe from SARS<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Wealthy South Africans are not immune to the high interest rate environment, and it’s hitting some of them hard. <\/p>\n","protected":false},"author":92,"featured_media":702685,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[853],"class_list":["post-785283","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/785283","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=785283"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/785283\/revisions"}],"predecessor-version":[{"id":785453,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/785283\/revisions\/785453"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/702685"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=785283"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=785283"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=785283"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}