World Cup sees non-essential splurge

2010-06-22 10:23

Blinded by World Cup enthusiasm, many South Africans are spending

money on non-essentials during the soccer tournament, a financial advisor said

today.


Octagon director and debt counsellor Paul Slot said: “Gripped by

enthusiasm and zeal, too many ordinary South Africans are making financial

sacrifices to buy all kinds of non-essentials which they are going to rue over

the long term.”


Only a minority would have made a conscious effort to save to

afford items such as tickets, clothing and memorabilia.


Slot said: “By far, the majority will be indulging in this

once-in-a-lifetime event, and the consequences for normal instalment and debt

repayments, even home loan repayments, could be dire.”


Social spending, Slot said, was buying items not usually included

in the monthly budget: “Countless corporates are investing in the event,

providing tickets and all the accessories for employees, and these employees

will allocate much smaller sums to their own social spending as a result.

But

those who don’t benefit from corporate spending will be increasing their outlay

on social spending.”


Repercussions could be neglected monthly repayments, a heavy draw

on credit and an escalation of financial stress. This would impact negatively on

consumers’ productivity, relationships and even health.


Reckless or simply unwise spending was already commonplace among

South Africans.


Slot said: “Over eight million consumers already have impaired debt

repayment records and most are not in a position to repay the debt

comfortably.”


The average consumer already used 47% of after-tax income to repay

debt which, paradoxically, drove consumers to get short-term credit – the most

expensive form of lending available.

 

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