Debt, guilt and shame

Cape Town - Many people, who have large debts, simply ignore it, because they feel guilt and shame for finding themselves in the situation.

But they have lots of company. Statistics from the South African Credit Bureau show that half of the 21 million credit-active South Africans have impaired records. This include people whose debt has been paid, but have not applied to be taken off the so-called black list, people who are currently blacklisted, and people who are more than three months in arrears on any of their accounts.

Just unsecured debt of South Africans stood at R160bn in the early part of 2014, according to statistics from the National Credit Regulator. The shocking thing is that South Africans are paying 76% of their income on debt repayment.

Two reasons for going into debt

There are two sides to the debt issue – one, where consumers use personal loans and credit cards to fund a certain lifestyle, and another where people are borrowing money just in order to buy food and other basics. This is to be expected in a country where the gap between the rich and the poor is among the biggest in the world. According to the World Bank, before taxes and social spending, the income of the richest 10% in South Africa is more than 1000 times bigger than the poorest 10%.

The issue of poverty relief and the indebtedness of the poor is a topic for another article. It is the first group, who are funding a lifestyle on credit, who are under discussion here.

It’s one thing taking out a loan in times of crisis (and then paying it off as soon as you can) and quite another living the high life on a deck of credit cards.

Debt means worrying. It means that you are feeling financially vulnerable, as you have no resources in a crisis, and that you feel a sense of shame that you find yourself in this situation. And once you are in the clutches of a loan shark, it is very difficult to find your way out again. Loan sharks thrive on desperation, which you would feel when your children are hungry, or you need to loan money to bury a parent.

The one aspect to debt that cannot be calculated in financial terms is the anxiety it causes. In retrospect, many people will feel that the joy that the fancy new car gave them was completely cancelled out by nights of worry, and a constant feeling of financial doom.

Coupled with a feeling of shame that they could not afford to pay for a certain lifestyle, and now find themselves deep in debt, debt can end up having a profound effect on one’s mental well-being. This can ultimately take its toll on one’s general state of health as well.

Signs that you feel shame and guilt about your debt, and could be in denial:

* You don’t open your bank statements;
* You don’t really know exactly how much you owe and to whom;
* You do not like discussing your finances with anyone – least of all your bank manager or your spouse;
* You deny that you are in need of debt counselling, and maintain to others that you are coping with the situation;
* You would rather die than tell friends or family you cannot afford something;
* You hide things you have bought from your family or partner;
* You owe friends and family money – and you’re avoiding them because of it;
* You lie awake about your finances, but you can’t seem to stop spending, as going shopping makes you feel good for a short while;
* You feel that you are entitled to a certain standard of living and you feel deprived if you can’t manage it;
* You don’t want people in your life to know how many accounts or credit cards you have;
* You are using one credit card to pay the minimum amount on another one and regularly have these limits increased;
* You find yourself month after month taking out short-term payday loans and you’re not telling anyone;
* You borrow from one friend to pay another one back.

 - Add your voice by sharing your debt  experiences, debt-busting tips and insights. Have a question? Ask our experts.

Disclaimer: Fin24 cannot be held liable for any decisions made based on the advice given by debt experts. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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