For many South Africans, payday is a stressful experience because of over indebtedness and growing financial constraints. Simphiwe Mbokazi African News Agency (ANA)

For many South Africans, payday is a stressful experience because of over indebtedness and growing financial constraints. 

Simple debt- relief guidance and advice could go a long way to greater peace of mind and fostering long term financial stability and wellness according John Manyike, head of financial education at Old Mutual. There is no doubt that over indebtedness could affect one’s mental health.

According to the Credit Bureau Monitor, nearly half of South Africans have an impaired credit record. The country’s debt to income ratio is about 73 percent, which means 73 percent of disposable income goes toward servicing debt. This means that R73 of every R100 gets taken away to service debt, which is significantly higher than what is considered the healthy global rate of 36%. South African credit active consumers are in intensive care unit as far as debt levels is concerned.

Manyike says the issue starts with most people not being pragmatic about how they manage their money. Dealing with one’s mindset first is very critical. A person must start by firstly accepting that there is a problem, and then should make a conscious decision to live within their means as well as making use of a budget by identifying what is a need and what is a want. You need to psyche yourself up even if it means pretending you earn less than what you actually earn and behave as such when it comes to spending money.

"You can use credit to create wealth. It also does not mean that everyone that has been over indebted fell into that situation because of recklessness or irresponsibility. Circumstances differ from person to person. But there is a large portion of our population that is obviously credit hungry, living in too much debt for both instant gratification and the pressure to be validated via social platforms," said Manyike.

He added, "Some people’s month ends are like a photo finish. Some are pay- day millionaires that spoil themselves rotten then become broke just three days later, because they have spent the little money that was left after debit orders". 

The reality is if you can only afford something on pay day and not during the month, it simply means you cannot afford it.

The Old Mutual 22 Seven app is ideal for people who are struggling with budgeting. Spreadsheets have pre-populated debit order and other debt repayments which helps the user take better control of their repayments. It also assists in helping determine the best and fastest ways to pay down debts.

If over indebtedness is not taken seriously, it can often affect the daily functionality of many South Africans because it comes with unimaginable stress.

Research from the DebtSafe June 2019 Financial Reality Survey has shown that debt-related stress can affect people’s physical, emotional and mental health. Furthermore, results from the 2019 Old Mutual Savings and Investment Monitor shows that Debt levels and financial stress continue to be closely linked, with levels of debt-related stress growing in 2019 to 70 percent vs. 67 percent in 2018, 64 percent in 2017 and 52 percent in 2016. These are respondents who described their stress levels as "overwhelming" admitting to having too much debt and having trouble managing it.

Performance at work, social and family relationships could change, and it might also pose many challenges for future job prospects because employers perform recruitment credit checks on applicants as part of the screening process.  

So, it is best to rather avoid getting into such uncomfortable situations and take control of your money. Start bossing your money around and be On the Money, concludes John. 

PERSONAL FINANCE