festive season

Four signs you’re in financial trouble this festive season

Andile Sicetsha - 30.11.2020

If festive season spending is giving you palpitations, this article is must-read.

The festive season is finally here and with the kind of year we’ve had, the jolly good atmosphere around this period could be dampened by our lightweight and flaily wallets.

South Africa’s unemployed faces bleak festive season

Unless you’ve sworn to stay indoors and binge on Netlfix holiday movies in fear of the pandemic, the thought of December’s festivities should worry you if the coronavirus (Covid-19) had a negative impact on your financial standing.

Since the onset of the Covid-19-influenced lockdown, approximately three million jobs have been lost, adding to South Africa’s record-high unemployment rate of 30.8%.

While it is true that the return of some industries holds promise for a snail-paced economic recovery, millions of South Africans, particularly the youth, are currently surviving under conditions propagated by deep financial strain.

The pressures of the festive season affect this group the most. Summer time in South Africa for young proffesionals means that wherever possible, one must have the financial means to fit in with ‘the now’.

Weekends are packed with social events packing headliners you can only see once a year in your respective city. There is also the upkeep of the ‘festive’ lifestyle on social media that requires a certain level of attention.

Cultural events dominate this period too and it all calls for a level of tolerance on your financial standing.

More often, the easiest way to get through the festive season is living with little-to-no conscience. However, an absolute truth we always ignore is, this mindset is counterintuitive.

Four signs you’re in financial trouble this festive season

Benay Sager, chief operation officer at DebtBusters warns that heading into this year’s festive season, “many South Africans either have money problems or may have in the near future.”

This, he says, is largely caused by an uncertain economy, already high levels of personal debt and the desire to reward oneself in December.

The toxic mixture of wants that are exacerbated in December and a bank balance that can’t meet them can cause severe financial stress, one of the most common triggers of depression and anxiety.

“If you recognise the signs of financial stress and act quickly you leave yourself more options to get out of debt or get help to restructure what you owe,” Sager says.

DebtBusters has highlighted these four signs to look out if after a peek at your banking statement, you fear you may be in financial trouble.

Your savings account is empty

If debt repayments mean you don’t have enough money to save some each month, it could indicate you’re financially overstretched.

You’re falling behind on monthly payments

Not being able to pay your bills is a sure sign that you’re struggling financially, but on its own, it doesn’t necessarily mean you’re financially stressed yet.

If you act quickly and explain the situation to lenders you may be able to work out a payment plan or change the terms of the loan.

You may also be able to re-prioritise your spending, so you are able make all your monthly payments.

A good way to do this is to draw up a budget, so you can see exactly where your money is going and cut any unnecessary expenditure.

You’re using credit to cover your costs

If you’re relying on credit cards, dipping into your overdraft account, taking out last-minute loans or other forms of credit to meet basic expenses such as food and fuel, a big red warning light should be flashing.

Usually, it’s only a matter of time before you max out your credit card or an unexpected expense tips you over the edge.

You’re borrowing to pay your debts

You are in an unhealthy financial situation if you’re borrowing money from friends or family, using your credit card to pay your overdraft or vice versa or applying for more loans to pay what you already owe.

‘It’s all avoidable if you seek help’ Sager

If you’re unable to pay back your debt, taking on more debt is the beginning of an inevitable debt spiral. If you fail to act, your credit score will be affected, limiting your ability to borrow more.

Some creditors could also attempt to get back some of their money by repossessing your assets.

This may be all doom-and-gloom but according to Sagers, financial trouble is highly avoidable if you seek help at the right places.

“If they recognise the signs early enough and act quickly some consumers will be able to get themselves back on a sound financial footing. For those who will need some help, the good news is South Africa’s debt counselling sector works well. Last year DebtBusters alone issued 5 000 clearance certificates,” says Sager.