Actually The Answer Is Worse Than Bad
We know the world economy is not in a healthy state and is being mirrored in the local economy in South Africa. One presumes that many people are living from paycheck to paycheck with the bulk of the outgoings paying debt. The last article I read a few years ago mentioned 70% of all incoming earnings was being used to pay off current debt. That we know is not sustainable and will only end up with people digging a deeper debt trap for themselves.
Getting out of debt is so hard to achieve and why once you have experienced this you will avoid this at all costs. I have no debt besides the house payments each month and that is the way I live as I do not believe in living off credit. The bank last year even denied my renewing of the credit card because I have not used it since 2015 and I miss having it even though I never used it because it is a safety blanket if required.
South Africa has around 27 million people who qualify for credit and out of that number 10 million are either 3 months or more in arrears with regard to payments. This is a telling number because these people are not adding to the buying power of the economy anymore. Losing 40% for retail is disastrous and no wonder businesses are struggling.
Mortgages/bonds make up the bulk of debt, but we all know the credit cards are what has dug their debt holes even deeper. Over the last 10 years it became easier and easier to get access to credit with every major bank offering them to anyone. Now the tables have turned with credit being refused with rejections at an all time high of 70%.
I do not see these numbers improving any time soon and unfortunately these numbers are only expected to increase. I can only imagine what it must be like living under these conditions knowing your home is at serious risk. 3 months in arrears is not something I would ever consider mainly because you should see this coming a mile off. How anyone can get into such a financial mess I have no clue because that would take some serious effort to achieve along with pure ignorance.
This leads to long term financial misery with repossessions like cars being taken first followed by the home. I used to take notice of repossession auctions and need to revisit this as I need a new car for work purposes and I know I can pay around 40% of retail which is a bargain.