Problems Those Who Earn More Than R20,000 per Month Face

Times have been tough lately, with fuel prices steadily rising and our economy quaking in its secondhand boots. Many South Africans struggle to meet their living expense obligations and don’t have discretionary income, driving them to take out unprecedented numbers of loans. The amount of debt for citizens who earn more than R20,000 per month has skyrocketed– rumour has it that up to two-thirds of the middle classes’ income is spent repaying debts. Read on to discover why people who earn more than R20,000 a month are in hot water and what is to come.

Missing disposable income

The latest quarterly report from a distinguished debt refinance company reads that in the first three months of 2024, consumers’ have struggled to retain what was left of their disposable income. This is because of unrelentingly high interest rates and inflation, particularly food inflation. In addition, the absence of notable economic growth contributes to the stifling of the working-class economy.

The report’s data was extracted from debt counselling applicants, whose responses revealed that debt counselling enquiries have risen by a shocking 22%, and online debt management services have risen by a third compared to rates last year. Debt problems have been more noticeable in the middle class over time, however, the upper middle and upper class should beware, too. These households have been found to utilise as much as 62% of their income to lay off debts.

Debt eats the rich

The debt-to-income ratio is now 172% for people taking home R35,000 or more– some of the highest DTIs to be recorded, according to the data. And, among these top-earners, unsecured debt numbers are 41%–almost another half–higher. Without salary increases, we can expect even the highest earning in our nation to fall deeper into debt. Even worse, is that the average interest rate for unsecured debt is at a staggering 25.7% per annum.

Our nation’s buying power is down by 47%, and we’re earning 1% less than we did 8 years ago (2016). What lies in store for South Africa’s economy?

If you need assistance managing your debt, let DebtCo Group help you regain control of your finances. Contact us to collaborate with one of our legal professionals today.