In South Africa, more than 27 million people are credit active consumers in the formal credit market.
Since 2009, the value of consumer credit has increased. Annually, between 2009 and 2012 there has been an average growth rate of 24%.
According to the Financial Sector Outlook Study 2022, more than 50% of South Africans using formal credit services, are over-indebted.
Why are people increasingly becoming over-indebted?
The combination of high-unemployment, rising food prices, and slow economic growth has increased South Africans' need for access to credit, while also decreasing their ability to repay their debts.
So how do you know if you are over-indebted and have too much debt?
Simply, over-indebted (having too much debt) means that you are more than one month behind on your debt repayments. It can also mean that you do not have enough money for living expenses when you deduct your expenses from your income.
Is this you? There is no shame with this. We can help you by consolidating all your debt and reducing your monthly debt instalment by up to 50%. Let us contact you about how debt review can help you!
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One way to check if you have too much debt is to consider your debt-to-income ratio. A debt-to-income ratio is expressed as a percentage of your income going towards financing your total monthly debt payments.
How do you calculate your debt-to-income ratio?
List and add all your debts. Divide it by your gross monthly income x 100.
Example:
If you earn R20 000 per month and your monthly debt adds up to R18 000, this is how you would calculate your debt-to-income ratio:
18 000/20 000 x 100 = 90%
If your debt-to-income ratio is over 65%, it's a serious cause for concern and you may want to look at all your options for reducing this debt.
Read this blog post for 5 proven strategies to get of debt.
11 questions you should ask yourself to check if you have too much debt:
1. Are you lying awake at night worrying about money?
If you’re struggling to sleep because you’re worried about how you will pay for everything, there’s a good chance you could be over-indebted.
2. Is debt interfering with your home and or your work life?
If you find yourself unable to focus at work, or becoming more frustrated with the people around you because you can’t seem to stop worrying about money, this could be a sign that you are over-indebted.
3. Are you in arrears on payments?
If you’ve missed more than 3 months of monthly payments, there’s a good chance you won’t be able to catch up with paying it again.
Unless, of course, you register for debt counselling at Meerkat.
We will help you:
- Reduce your monthly debt repayment.
- Call creditors to significantly reduce the interest you are paying.
- Help you actually have money to live after paying your debt.
You don't need a financial advisor. Let one of our Debt Counsellors call you to discuss our debt review solution.
4. Have you received a Section 129 notice?
A Section 129 notice is a notice (letter) given to a consumer who has not been able to keep up with their payments. What’s important to note about a Section 129 notice is that it is the last step a creditor has to make before taking legal action against you.
Have you received a Section 129 notice? Protect your home and car from being repossessed, fill in the form to find out more about debt counselling at Meerkat.
Fill in the form now.
5. Do you use more than one credit card?
Is your lifestyle maintained by credit? Do you rely on credit to pay your bills, eat, pay for electricity and buy yourself clothing? If so, you are in a risky position to become over-indebted.
6. Do you only make the minimum payment for your credit card debt each month?
If you’re paying the minimum balance on your credit card each month, you will end up paying more than your original debt. This is because of the interest charged. If you’re doing this, you may get the point when you simply cannot afford to make those minimum monthly payments anymore.
7. Do you borrow to pay your bills?
Do you make use of payday loans?
8. Do you skip paying bills some months?
If you’re trying to play catch-up and debating which bill is less likely to take legal action against you, you are probably over-indebted.
By skipping payments, you are also negatively affecting your credit score.
Did you know: your payment history comprises 35% of your credit score.
9. Are debt collectors calling you?
If your phone has become a source of anxiety for you. If you’re avoiding every unknown number because you fear it may be another debt collector harassing you, you could be over-indebted.
Imagine picking up your phone without worrying that it’s another debt collector trying to get money from you?
You don’t just have to imagine. This could be your reality. How? With debt counselling (debt review) from Meerkat.
Read: Debt review - everything you need to know
10. Do you mostly pay your bills late, if at all?
You just can’t seem to make payment on time. You’re always trying to play catch up with making all your payments.
If you find yourself in this situation, exhale. You must be exhausted from always trying to make it work and never quite getting there.
You deserve to breathe easily again. Did you know there is a way to live without worrying about how you will make all your payments? There is a way to live without worrying about making those payments on time.
Let us chat to you about debt counselling. You don’t have to commit just yet. We’ll walk you through everything and answer any questions you have.
Fill in this contact form. We'll get back to you soon.
11. Is more than 50% of your salary going towards paying off your debt?
There’s never quite enough money to live after paying all your debts. Treating yourself or your family members seems like such a pipe dream.
Are you over indebted? Take our quiz!
With all the interest rate increases that have already taken place, and more expected during the course of this year, things are just going to become more expensive. If you are already spending more than 50% of your salary for debt, you are in a vulnerable position to become over-indebted.
Fill in the form. One of our Debt Counsellors will contact you and they can assess whether or not you’re over-indebted.