Let's talk about the real reason why so many of us fall into debt these days

The other day Pick n Pay announced that it will be offering a credit card. A lot of people were not happy with that move by the company.

I asked people who were not happy with Pick n Pay's move, what is the difference between Pick n Pay and Woolworths card or any other card for that matter? I mean most people have credit cards and own three to four store cards. I was really hoping to get a debate going but I got the standard response of "credit cards are bad and more people will be going into debt."

This is what I know for a fact, peoople are already in debt and this has nothing to do with Pick n Pay! And I can prove this.

The National Credit Regulator (NCR) earlier this year reported that consumers owed R1.6 trillion to lenders and SA consumers were the most indebted in the world. Some 40% of the 24m credit card consumers had currently an “impaired record”, which was defined currently as three or more months in arrears or were listed with a credit bureau or who had been subject to a court judgement or administration order.

Debt Rescue’s in-house statistics shows that the largest amount of debt in South Africa is between 31 and 45, who collectively owe 53% of all outstanding debt. The data also shows that men made up 49% of the indebted consumers while women came in first with 51%. Debt Rescue listed three areas where outstanding debt is most prevalent:
  • Personal loans (94%)
  • Credit cards (84%)
  • Store cards (76%)
Debt Rescue also said more than half of all consumers owe 75% or more of their income to creditors while the other 76.58% are flat broke.

Clearly we have a crisis. So, let's talk about the real reason why so many of us are in so much debt these days

Are credit cards really a problem? Let me ask you another question, are fast food companies to blame for obesity?

I'ts it's important that we address the real reason why people go into debt instead of demonising credit cards. This quote here perfectly sums it up.

"A judge said that all his experience, both as counsel and judge, had been spent sorting out the difficulties of people who, upon the recommendation of people they did not know, signed documents which they did not read, to buy goods they did not need, with money they had not got." - Gilbert Harding

Wow! That is exactly why I went into debt. Being part of the middle class costs money and encourages us to do things that may not be in our own best interest but we do it anyways. In addition to this, we get into debt because we don't know how money works, how to budget or how to manage our personal finances.

I know the ridiculous tactics financial companies like banks employ to lure us into spending more money. But here is the thing, your Pick n Pay and the Kumalos of this world (examples of a standardized idea of middle class life) don't force you to get yourself into debt. The final responsibility is on you as the consumer.  If you choose to sign a contract without reading it, and to take on obligations that you can't fulfill, then you must live with the consequences. Sadly nowadays it’s easier for most consumers to just shift the blame off  themselves and blame the big bad corporate.

But we all love spending money, and we come up with any number of reasons to do it. Here is what the women I interviewed had to say about why we fall easily into debt and they also share some advice:

We're too drawn in by what other people have. Don't buy the flashy car if you can't afford to maintain it and pay the installments. You don't want to struggle to eat every month just so you can look good - Pippa Tshabalala

Because we choose short term satisfaction over our long-term goals. I’m totally guilty of this. We say things like ‘but I deserve it’ or ‘this is an emergency’ when really we know it’s not. In those moments I’m learning to take a step back or sleep on it before I so easily swipe that card. 90% of the time, I don’t end up doing it - Carly Barnes 

Cost of living is getting higher and higher, and sometimes the debt that we get ourselves into is unavoidable. Also we are the instant gratification generation, as a result we don't always make the best financial decisions - Salamina Mosese

FOMO (the Fear of Missing Out) – Social media paints an overly perfect picture of people’s lives and makes everyone’s life look like a constant ball of fun. People don’t necessarily post pictures when they miss out on events or the price they are paying for their extravagant lifestyles – anyone can “afford” nice vacations and expensive clothes if they have enough credit cards. Social media definitely adds some pressure on how people spend their money – even money they don’t have - Lungile Mashigo

When I look at the world around us compared to a few years ago there's far more money and marketing traps are easily available. And it's so easy to fall into them if you don't monitor yourself. You know that feeling when you walk into a fashion shop and all you want to do is buy and when you get home with the items you don't even wear it. Too many of us are influenced by that and by the media and social media portrayal of 'socialites' and celebrities living the life when in actual fact they're only providing a service to the entertainment industry. Be aware of how this affects you and empower yourself to know better. Never live beyond your means - Kia Johnson

Knowing what you’re up against is the first step to solving a problem, and only when you do can you make any real progress. If you know you can't make a full payment each month to clear a credit card then don’t get one. Like the saying goes, "cash is king." Millions of people do just fine using cash and debit cards only. Having a credit card is not mandatory. 

In closing you can blame credit card companies all you want for their marketing tactics, but rest assured you’re 100% responsible for getting yourself in and out of debt. If you find yourself indebted, contact NDA today for a debt counselling service that will put you back on the road to financial freedom.

I'm curious to hear your thoughts. So, let's talk about the real reason why so many of us fall into debt these days.  You can share your thoughts below.

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