South Africa has an economy that fluctuates constantly as fuel prices and electricity hikes send the cost living into record highs. This means that consumers are finding it difficult to keep up with the lifestyles that they have established for themselves as budgets begin to stretch thinner and thinner. These pressures are leading consumers to financial choices that cause financial problems and as a result massive debts.
Consumers are becoming increasingly reliant on the convenience of their credit cards. This means that instead of treating it as an emergency tool, credit cards have become and unofficial extension of consumer’s incomes. As soon as a payment is made on the card, consumers spend that money on living expenses as their budgets are simply not enough to cover these expenses. It becomes the credit card shuffle, with one card’s payment eventually covering several expenses. Although it may be difficult, consumers should not be doing this, and should rather cut expenses and leave the credit cards at home.
Another cause of financial problems is that in a consumer culture that is driven by always owning the latest clothing or technology, consumers are continuously relying on store credit to afford these things. This is a terrible cause of financial problems, as the interest rates and short repayments terms on store credit makes it one of the worst debts to acquire. Therefore consumers should rather try and save up, or learn to live without the latest technological wonder for a while. Fads are fleeting, financial problems aren’t.
The fact is that consumers cannot meet the economic demands of a country where the cost of living rises exponentially, and as a result they are making poor financial decisions. These decisions are causing massive financial problems for consumers and as result plunging them into debt.
Article written by: Andrea van Tonder 07-2013