BUSINESS NEWS - Debt is a real issue in South Africa. Don't believe it? The World Economic Forum has called South Africa the most over-indebted nation on earth.
In a country where 22 million people have access to credit, more than half have not paid back what they owe in over three months.
South Africa has embraced democracy with fervour and the promise of a good life is all around us. Big loans have become standard as a result, but financial literacy has not progressed at the same rate, leaving millions of people out of their depth.
"Debt in South Africa is a national emergency," says Glen Jordan, Director of IMB, a nimble and rapidly growing financial firm that is helping ease the debt problem. He and his team are determined to help as many people as possible get out of debt – and stay debt-free.
"Debt has a solution," Jordan says. "Keep these 8 golden rules in mind."
When you're trying to manage your debt and save money, there's a golden rule: wait 30 days, and if you still need that product, only then buy it. The aim is to kick the habit of buying on a whim when you're in the red. "It's a mind-set shift," Jordan says. Unless you're buying a house or a car, wait until you have the money – then buy it.
2. Always read the fine print
"Never sign anything without reading the fine print," Jordan warns. Remember, as soon as you sign a document, you are bound the terms of that document. So while it might seem logical to buy a television in monthly instalments, read the contract in full and ask questions.
During Christmas, New Year and other holidays, people notoriously spend money they don't have. "Yes, these are times for celebration," Jordan says. "But remember: when the festive cheer dies down, you're left with the reality that you need to pay that money back."
"This should go without saying", Jordan smiles, "but if you're in debt, spend less. In my time, I've come across people seriously in debt who have simply taken out more loans to fuel their spending habits. That's not a solution."
"Denial is real," Jordan cautions, "and it keeps people trapped in the cycle of debt for months. The first proactive move is this: speak up. Once you articulate your problem, you'll empower yourself to find the solution."
Loans are never ideal, because you end up spending more money than you borrowed. But if you need a fast injection of cash, make sure you're not borrowing a lump sum you could never hope to pay back. You run the risk of being blacklisted, which means you can never borrow money again.
There's hope at hand. Even if you're drowning in debt, know one thing: South Africa has strict rules designed to protect the consumer in matters of severe debt. "Many consumers don't know that there's actually a solution," Jordan says. "We meet people every day who think their debt is a reality they can't escape. But that's not true."
You have rights, which means that when you borrow money you can't pay back, you may not be the only responsible party. The lender also has a responsibility to check that you are a suitable candidate and that you can afford to pay the money back.
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