South Africa's middle class is facing a financial crisis, burdened by over indebtedness amid the highest interest rates in 15 years and an escalating cost of living that erodes shrinking salaries.
The latest Money-Stress Tracker from DebtBusters reveals that South Africans earning R20,000 or more per month are struggling with unsustainable debt, with half of their take-home pay going towards debt repayments.
DebtBusters conducted this extensive survey, which included responses from 26,000 South Africans not currently in debt counselling, making it one of the largest studies on financial stress in the country.
The report indicates that financial stress levels have remained high over the past three years, with 70% of respondents under 55 expressing concerns about their finances.
A significant finding is the high percentage of after-tax income spent on debt by those earning R20,000 or more monthly.
Specifically, 68% of respondents spend more than 30% of their after-tax income on debt repayments, and 53% allocate over 40% of their paychecks to service debt.
Financial advisors typically recommend that consumers spend no more than 30% of their take-home pay on debt repayment, with an upper limit of 40%.
The research underscores that 62% of South Africans earning over R20,000 have unsustainable debt levels, with 46% spending 50% or more on debt repayments.
Despite this alarming situation, over 73% of individuals in this income bracket believe they do not need debt counselling, citing trust issues as a primary reason for not seeking help.
In contrast, 54% of younger consumers are open to addressing their financial stress, although they are often unsure of the available options. Among those under 35, embarrassment is a common barrier, while those over 35 tend to procrastinate.
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