How side hustles can help combat rising debt

AS consumers continue to battle with making ends meet, income is being eroded by inflation, and jobs are being lost, one solution is to start a side gig.

- NICOLA MAWSON

Research indicates that between 14% and 16% of middle-income households earn additional income from one or more side hustles, according to loan provider DirectAxis.

This comes as debt is increasing, with DebtBusters stating that, as of the first quarter of this year, 91% of consumers who applied for debt counselling had a personal loan a record since it started compiling its regular Debt Index.

"Personal loans, especially one-month loans, remain a lifeline for many, because income has not kept pace with rising expenses," says Benay Sager, executive head of DebtBusters.

Inflation has had a serious compounding effect on people's ability to make ends meet and has been eroding their take-home pay. DebtBusters' data shows that the compound effect of inflation means that consumers have 53% less purchasing power now than in 2016.

Its figures indicate that, of those who have applied through it for debt counselling, an average of more than two-thirds of their net income goes into paying down debt - the highest percentage since 2017.

Compared to 2016:

• Consumers in most salary bands spend 25% of their disposable income, after debt repayments, on water, electricity, rates, and transport.

• Food inflation has led to sacrificing insurance and assurance cover.

For people taking home R35,000 or more, unsecured debt levels have increased by 90% the highest ever.