Monitor your finances


Isaac Moledi

Isaac Moledi

The National Credit Regulator has called on debt-stressed consumers to adopt survival tactics.

Economists say payment defaults have escalated sharply for almost two years and there appears to be no let-up in the trend.

Fred Steffers, managing director of the Consumer Profile Bureau, South Africa's most comprehensive source of credit information, confirms that there has been a substantial increase in adverse credit judgments.

He says the rise over the past 18 months in insolvencies and adverse judgments confirms that debt is catching up with consumers.

He says banks and finance houses, despite conciliatory public statements that they will help indebted clients to reschedule debt, are doing very little to help solve the crisis.

Eddie Stoop, chief executive of the Elite Group, a major player in the micro finance industry, believes the increase in adverse judgments and insolvencies has had a positive effect on his business because people who do not qualify for bank loans were approaching micro-lenders.

One expert has estimated that up to 80 percent of smaller loan applications are being turned away by the big four banks.

"The past six months had been record months for the company with growth in the double digit numbers," Stoop says.

"The net result is that Elite and other micro-lenders are all reporting record growth."

Steffers says there has been a substantial increase in credit enquiries from micro-lenders, which indicates an increased turnover by the sector.

"The substantial increase in civil debt judgments, personal insolvencies and liquidations, coupled with the downturn in the economy, had scared many banks away from the unsecured loan sector.

"In many cases, micro-lenders had picked up the slack," he says.

The national regulator (NCR) has stepped in to help and has asked consumers to call the institution at 0860-627-627 for professional support and a helping hand for a registered debt counsellor.

Peter Setou, education and strategy senior manager at the NCR, says one of the most important elements to help consumers is for them to know their financial status.

"It helps to know all your creditors. When you experience problems repaying debt, contact all your creditors and discuss your situation with them," says Setou.

The NCR advises debtors to downgrade and to change their lifestyle. For instance, if you have an expensive car, get a cheaper one to reduce monthly instalments, thus enabling you to pay other debts.

Public transport must also be considered, advises Setou.

Compare prices and settle for less when grocery shopping.

Alcohol, cigarettes, entertainment, club membership, pay TV or satellite TV, holiday clubs and gambling are some of the items the NCR suggest you cut out.

"It's time to take control of finances. Know exactly where you spend your money. We all need to make smart, conscious choices about our finances," Setou says.

Only buy what you cannot survive without, and look for specials.

"Instead of takeaways or eating out, cook your own food. This may also prove to be healthier," advises the NCR.