Big earners live on credit

UNSUSTAINABLE: SOME WITH INCOME OVER R35 000 USE 74% TO PAY DEBT

- Adriaan Kruger

Figures from debt counsellor DebtBusters show that people who should be able to live comfortably off big salaries are increasingly turning to unsecured debt to maintain their lifestyles.

"It is concerning that people in higher income brackets need to supplement their income with debt," said Benay Sager, executive head of DebtBusters.

"It is not sustainable. You can only do it for a month or two, then you will get into trouble."

An analysis of the finances of consumers who applied to DebtBusters for debt counselling in 2024 revealed that, on average, they were forced to use 68% of their net monthly income to repay debts.

"This is sharply higher compared to the last several quarters and is the highest recorded level since 2017.

"Those taking home R35 000 or more per month need to use 74% of their income on debt repayments and their total debt to annual net income ratio is 187%.

"Those taking home R5 000 or less per month, who are the most vulnerable, need to use 75% of their income on debt repayments.

"These ratios are at their highest-ever levels," said Sager, adding that the debt figures quoted for the firm's clients correlate closely with national figures supplied by the National Credit Regulator.

Increase in debt counselling inquiries

There was an increase of 8% in people inquiring about debt counselling, while people who subscribed to the DebtBusters online debt management tools - which help people to analyse their debt, budget and create their own plan to reduce debt - increased by 9%.