Why bad debt happens to good women

3/01/2017


I learned early on what debt means, how vulnerable it makes people...” Elizabeth Warren’s words only give you the tip of the iceberg of the situations ladies can find themselves in.

Everyday mothers, sisters, grandmothers, as well as businesswomen find themselves in helpless situations. Hair-raising stories can be told about their debt experiences. The reality is that bad money holdups do happen to both, ordinary and good women.

And the question one should ask is: why women could get stuck with a bad credit record and over-indebted accounts?

Zeeva points out a few financial problems that ladies may be struggling with:

A SINGLE MOTHER’S BURDEN
A single mother can have various reasons to go into debt-overload:
  • Her husband may be deceased and she is left with bad debt due to no available testament.
  • She is divorced and struggles to pay her excessive attorney bills and/or receives no child support payments from her children’s father..
  • A single mother’s income can’t keep up with the inflation increases such as groceries and utility bills that are getting more expensive by the day. Take a look at Old Mutual’s Savings & Investment Monitor – A closer look at women for a few interesting statistics. It indicates that even back in 2012, 51% of single moms struggled to make ends meet.
  • Falling victim to the ‘failure to launch’ syndrome – a mother can become swept up by the financial demands of her dependent young adult children.  And she might be struggling to maintain her own independence.
  • Other unforeseen bills (car maintenance, children’s additional education costs and school tours) that have to be paid, can lead a single mother into uncontrollable debt. 
PUTTING LOVED ONES FIRST
Ladies tend to go the extra mile for family and friends - this can lead to overspending and an overgrown debt-pile:
  • According to Old Mutual’s Savings & Investment Monitor – A closer look at women 95% of mothers try to give their children the best opportunities in life. These opportunities may involve extra costs such as extracurricular activities.
  • Women might be part of the Sandwich Generation - a generation of people (usually in their 30s or 40s) who care for their ageing parents while also supporting their own children. This is a modern-day reality for some women and the financial responsibilities involved, can have a massive effect on women’s financial stability.
  • By caring for their loved ones, women can sign surety for a loved one’s loan – which is a very risky move as good intentions don’t always get good results.
PURCHASING BEHAVIOUR – THE FOR LOVELY THINGS
  • Ladies (not everybody of course) try to keep up with the Kardashians by continually worrying about their social status, which entails loving and buying lovely and expensive (as well as unnecessary) things.
  • According to DebtSafe’s 2015 survey analysis on savings and spending habits, 63% of women do not use a shopping list effectively. Even though 37% of these women do make a shopping list, they don’t keep to their list and continue to buy additional items.
  • A report on a survey into female economic behaviour and the emotion regulatory role of spending (done by Professor Karen J Pine from the University of Hertfordshire) found that almost 80% of women’s primary motivation to shop was ‘wanting to cheer themselves up’. This type of impulsive behaviour can get women into major debt trouble. 
KNOWING THE INS AND OUTS OF FINANCIAL PRODUCTS
  • Some women don’t want to be burdened with the ‘heavy stuff’ of financials such as budgets and wills. They therefore feel it is a man’s responsibility.
  • A communication gap on finances can occur – say a woman gets married, discussions on the type of marriage contract do not necessarily take place (within community of property) beforehand. Or during the marriage, her husband has no idea what is going on with her finances, as traditional roles are implemented (men take care of finances for example), and this causes a lack of proper financial management.
  • Have you ever heard the statement: women are too naive? Women tend to be seen as easy targets for sales agents within various businesses such as the insurance, banking and motor industries. This statement shouldn’t however be generalised to all women.
  • Ladies can fall into a dodgy investment trap by not reading or understanding the info hidden in the small prints of contracts for example. 
LOSS OF EMPLOYMENT
  • Life throws regular curve balls and with the current unstable economic condition that South Africa and the world experience, many women can lose their income via salary cuts and in worst case scenarios, unexpected retrenchments. The Quarterly Labour Force Survey 2016 indicates that the South African women’s unemployment rate is 4% more than the men’s joblessness rating (first quarter).
Many women might find themselves in one or more of these circumstances; but you can have the final say by taking control of your over-indebted situation by #undebtyourself.

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