Out of denial, out of debt

The phone rings incessantly. On the other end is a stranger who doesn’t know you, doesn’t know that you’ve always been the responsible type, and that you would make the payment if only you could.

You want to hide, run away, but you know there’s no escaping. In our current economic climate, over-indebtedness is distressing an ever-growing number of South Africans and with retrenchments rolling, and the cost of living continuously rising, the problem won’t be disappearing any time soon.

“Consumers tend to panic, hide away from creditors, and take on more debt to pay off what they are already struggling to repay, and by doing so they get themselves into more financial trouble,” says Peter Setou of the National Credit Regulator (NCR). It’s a vicious cycle and there are many factors that will influence your ability to service debt, including job losses, high interest rates, and increasing basic living costs.

Our materialistic consumer culture doesn’t help matters, and many women continue to take on credit in an effort to maintain a certain standard of living. But now is the perfect time to downgrade to a more realistic and affordable lifestyle, says Setou. “Things you need to cut out or adjust include: alcohol, cigarettes, entertainment and eating out, expensive clothing, club memberships, satellite television, and holidays and weekends away.” It’s not going to be easy, but this is a vital step in recovering financial health, as Michelle Young* (name changed) discovered first hand.

“As far as I knew, my husband and I were a financially secure couple,” says the 35-year-old mother of two. “We owned our own home, two cars, we went on regular holidays, and we did our grocery shopping at Woolies. On weekends I would shop up a storm, and loved nothing more than spoiling myself with a new pair of shoes or designer handbag. I wasn’t earning enough to afford these, but my husband did, and he paid my credit card bills at the end of the month.

“Then I discovered that my husband had hidden the truth about our finances, and we were in a far worse position than I could have imagined. I was left to fend for myself, and my kids, and I had a mountain of credit card debt to my name that my husband was no longer able to pay off. Before long my phone started ringing; the calls started early in the morning, and kept coming until all hours of the night. My debt was catching up with me, and the collectors were relentless.

“I earned a respectable salary, but it wasn’t nearly enough to maintain the lifestyle my kids and I had been accustomed to. I had to trade in all luxuries to afford the necessities, and even though we were living on the bare minimum, I still couldn’t meet my monthly repayments.

“I felt utterly helpless and was consumed with guilt and shame at my own ignorance. It was affecting every aspect of my life. I couldn’t sleep at night, couldn’t focus at work, and worst of all, I was taking the stress out on my kids. When they came home with letters telling me their school fees needed to be paid urgently or further steps would be taken, I knew it was time to put my pride aside and ask for help. I contacted the NCR to find out what my options were, and they recommended I consult a debt counselling service.

“After that first meeting, I could finally breathe a sigh of relief. It wouldn’t be easy, but there was a way out. I could hand the problem over to the counsellors, and they worked out a repayment plan I could afford. Finally, the phone calls stopped. I had to change my lifestyle drastically; no more designer clothes, no new shoes to brighten my mood, and no more ready-made meals and expensive toiletries. But at least I could sleep at night and for the first time in months I felt like my old, optimistic self again.”

Michelle says her overall health took strain during this period, but she was fortunate to come out of it relatively unscathed. Many people aren’t as lucky. A 2008 Associated Press survey conducted to determine the impacts of debt stress on health found that among people who reported high debt stress, 27 percent had ulcers or digestive tract problems, compared with 8 percent for those with low levels of debt stress; 44 percent suffered from migraines and headaches, compared to 15 percent in the other group; 29 percent suffered severe anxiety and 23 percent had severe depression, compared with 4 percent on both counts in the low debt stress group. Six percent reported heart attacks – double the rate for those with low debt stress – and 51 percent had muscle tension, including pain in the lower back (compared with 31 percent). The survey found that people who reported high debt stress were also much more likely to have trouble concentrating and sleeping. The bottom line: debt is more than just a financial issue, and the stress associated with it can have a serious long-term impact. “Typical symptoms of stress can be physical, such as fatigue, headaches, nausea, indigestion, rashes and cramps,” says Nabeel Yasin, a biokineticist at Ubuntu Wellness Solutions, but often overlooked are the mental or emotional symptoms, such as depression, anxiety, anger, fear, and feelings of hopelessness.

According to Cassey Amoore at the South African Depression and Anxiety Group (SADAG), debt stress can exacerbate, or even trigger, depression and it’s important that you talk to someone about the financial pressures you’re under, rather than keeping them bottled up. “We are receiving a high volume of calls from family breadwinners who are incredibly stressed out because they don’t know how they’ll be able to access money for food, or school fees, or because their house has been repossessed and they don’t know where else to turn,” says Amoore. “If you’re feeling trapped in a desperate situation, contact SADAG. Talking about the problem will ease the pressure and may even lead to finding a solution you have not thought of yourself.”

“Debt counselling also provides an opportunity to talk openly about the problem, but by the time people come to see the counsellors, they’re usually in such a state of emotional upset that they don’t know what to do,” says Moeshfieka Botha, a marketing manager at Credit Matters. “The message we’d like to spread is that there is help available, and that it’s in your best interests to start addressing the problem before it spirals even further out of control. Seeing a debt counsellor and going under debt review will not remove the responsibility of making payments, but it will make it easier.” No legal action, summonses, judgements or repossessions can take place while you are under debt review, so your burden is automatically lightened. “You’re not alone in this situation, so don’t let shame or embarrassment prevent you from seeking help if you need it,” Botha says.

Here’s a credit crunch survival guide so you’re always in-charge and in-control of your finances.