A year ago one of our large banks reported 3% of their loan book behind in payments. A year later this is 12%. That is a fourfold increase. The increased cost of living and more expensive loans are driving families to the edge.
Once more the Banks find themselves owning unwanted motor vehicles, and being landlord of hundreds of extra properties every month.
I am horrified to find some clients with take-home pay of R8 000 pm, trying to pay clothing and credit card debt of R60 000.
In the UK some home owners found their home loan repayments doubling in one year. Thousands lost their homes.
While South Africa has been spared the worst of the financial chaos, we still face serious problems.
We learn bad spending habits from childhood.
Kyle is a 12 year old kid who I foster. Every week he gets some pocket money. A third goes to savings for his December holidays, and the residue for chocolates, cold drinks and other treats. I’ve noticed by the weekend he will never have more than 5 cents left over.
Last December he went off shopping with way too much money. This is the conversation on his return.
Myself: Kyle have you finished shopping?
Kyle: Not yet.
Myself: Whose gifts have you not yet bought?
Kyle: Everyone has a gift
Myself: So why are you not yet finished?
Kyle: Because I have R300 left over
I can guess how his budget will look as an adult.
Mary's father was the only breadwinner in her family. He decided who would get money and how much based on his mood of the day. Once a month her mother would go food shopping and Mary would tag along.
At the till, her mother would take her hand and as the total climbed, her mother would squeeze harder and harder until Mary felt her hand going numb.
If her mother had enough, there would be a sigh of relief and her hand would be released.
Today, 50 years later, Mary lives in constant fear that she will not have enough. It affects every decision she makes about money.
Mary needs a financial coach to help her identify her behaviour and find find alternatives.
As part of our outreach, we have recently published an ebook to help those who wish to overcome the chaos of overwhelming debt or destructive financial behaviour.
Those who wish to break the chains, can explore some of our recovery strategies.
