Reckless spending in a recession

Caught in a web of SPENDING

In today’s blog, we want to talk about reckless spending and the latest news for consumers that South Africa is back in the recession. We at Consumer Debt Support (CDS) can say the recession has been with us the past two years. We walk down the road in the lives of those struggling with reckless spending and what can be done to curb the problem. Taking a peek into how the recession will affect consumers of all walks of life in South Africa, is what we want to get across to our readers this week.

Here at CDS we have found individuals who engage in reckless spending, typically experience multiple symptoms and consequences related to the problem which has a name being spendthrifts. These consumers suffer from compulsive shopping disorder which is basically affecting the average everyday consumer, who just love buying stuff and occasionally buying compulsively stuff and things they really do not need. We can safely say that consumers must be able to determine between emotional spending and necessary spending. How one spends money, is the key to determine reckless spending and how to stop doing it.

One need to understand reckless spending and how we at CDS are dealing with our consumers and what we have found to be their medical diagnoses. A hand full of these consumers had been diagnosed with bipolar moods disorder, however it is not the same for everyone suffering from reckless spending. Most of CDS’s consumers who are diagnosed as being bipolar, are either already in debt review and had been in therapy, dealing with their over-indebtedness caused by their reckless spending on credit. One can’t say everyone who spends money recklessly is bipolar.

What we have found in our interviews with our consumers in debt review, is that reckless spending leaves these consumers feeling anxious about shopping and buying items which are not needed or wanted. This act of buying makes them feel good about themselves, not knowing it is the euphoric of being “high” that is experienced. Trying to understand this behavior as a registered debt counsellor who is not a registered psychologist or psychiatrist, can be very confusing and frustrating. That is why we prefer to get the professionals in to deal with our unique consumers that need the right help to overcome the reckless spending habits.

The panic we have seen that takes control of consumers in debt review when the store card or credit card is destroyed, helps us to understand that reckless spending actually effect all of us in one or the other way. We have found that it is the medium and higher income groups of consumers that find themselves frequently in deep debt to support their habits of reckless spending and buying. We know by now that most consumers buy stuff on credit cards or store cards and use unsecured loans with high balances to pay for the stuff they don’t really need. We also know that consumers re-use the credit when a new available balance becomes available the next month.

This is when they need to seek the help of a debt counsellor as no more credit is available to them and they reach breaking point, seeing their hard-earned money going into the debt hole. This is where we need to get professional help to assist them accepting the changes in their finances adjusting to the new budget, which is very difficult for these consumers to adjust to in the beginning. Here at CDS we have programs to assist our clients overcoming the obstacles adjusting to a new budget.

As said before, where we can help, we will get professional help in to assist. Reckless spending can be managed and the anxiety and other problems related to this condition can be dealt with to ensure the best outcome for the individual suffering. We have many success stories of consumers/clients that have learned to deal with their cash flow in a healthy budget and maintain a debt free credit profile after debt review.

How will the recession effect consumers and what can be expected?

What is important now going forward is not to make new debt in this very uncertain time, rather make arrangements and see how you can settle all your unsecured debt faster, or apply for a debt review free assessment https://www.debtcenter.co.za/contact-us/, where you can pay less on your debt and cut your budget to the bone and save some money at the same time for that unforeseen must have.  This could be a good time for consumers to get used to living within their means and keep to strict budgeting strategies and plan well in advance before spending any money on new furniture or other items that you could go with out for now.

Consumers could find themselves with declined take home pay, retrenchments and declined employment (known as job loss). Therefore rather saving every cent you can to ride this wave of recession out best you can be the safest option.

Consumers must realize that we are in a technical recession announced recently, with a double junk status that was announced just a few months ago. This can have many negative effects for consumers in the future that one does not realize now. What we can expect, is that interest rates will increase on credit agreement secured and unsecured. This can affect the monthly debt repayment that can cost you more and reduce cash flow spending. We can expect tax increases in various sectors and personal.

According to the latest announcements consumers could expect a price increase of up to 50% electricity price hike. Now we need to sit tight and see how this news is going to filter through to the end consumer.

For the moment one needs to start doing things differently. Spend money more wisely than before; buy groceries that you need weekly; shop around for discounts in food stuff. Cut out unnecessary driving and save on fuel costs. Show your family how to save on electricity, switch off the geyser and all unnecessary lights and outside floodlights that could burn day and night.

When you have paid up a creditor, please ensure you ask for your paid-up letter and close the account to prevent the temptation of using the credit facility again.  Visit your financial planner to evaluate your insurance premiums on life cover, where the premiums increase annually or might be expensive and not affordable and free up cash where you can and put it in a savings account for the rainy days up ahead. Or go to our contact us page and we will get someone to contact that can assist with cheaper insurances.

When a consumer applies for a new credit agreement and is declined due to an over exposed debt portfolio, these are the red lights that should not be ignored. Contact our team here at CDS. We can advise and assist with a free debt assessment.

If you have been issued with a summons on your home loan or any other account that is in arrears, please do make contact with us immediately for urgent help. Mention this information in the reasons for contacting us, click here  Do not ignore a summons — any summons can threaten your livelihood.

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