WHILE Mzansi celebrated Freedom Day, too many people are oppressed by debt.
Financial freedom seems too far away for many of us because we don’t handle credit and money wisely.
Credit ombud Nicky Lala-Mohan said that some people even resign from work to cash out their pension fund to free themselves from their debt.
Research showed that financially stressed workers spend most of their day worrying about their money problems instead of working.
Lala-Mohan is concerned about regular South Africans suffering in our economy – especially after the impact of the recent downgrade of our credit rating to junk status.
Rising petrol and import prices increase food and transport costs.
“Rising costs means people have to rely on more credit just to survive. This leads to a negative spiral of needing more and more credit to service debt.”
Causes of typical debt problems
- Buying essentials like food and petrol on credit.
- Paying off debt with credit.
- Relying on expensive, high-interest short-term loans.
- A lack of control over debt – people get too indebted and start missing payments.
-Not understanding your credit contracts before signing.
Blacklisted people get sucked in by predatory lenders – loan sharks or mashonisa’s – who will take back much more than their victims borrow.
To mark this year’s Workers’ Day, the credit ombud gave the following tips for workers.
Good credit tips
- Understand the difference between good and bad credit.
- Know when something is a “need” and what is a “want”.
- Take control when you get into trouble. Don’t wait but speak to your lender if your repayments are not going to be on time! Don’t let the lender think you are running away. Rather ask for a lesser amount to repay if you need a breather.
- Stop borrowing. The more money you borrow the more money you have to pay back.
For more information about the credit ombudsmen – visit www.creditombud.org.za.
