WAYS TO SEE IF YOU ARE OVER INDEBTED AND HOW TO GET HELP

Cape Town - Determining whether one is over indebted has always been a challenge. I guess partly because its very hard for human nature to admit having challenges and seeking help. However, over indebtedness is a serious problem among working South Africans. According to the National Credit Regulator(NCR) statistics released last year, South Africans have been developing a habit of spending not saving. The report shows that there has been an increase in the number of consumers applying for credit. The report revealed that South Africa is currently sitting at more than 25% unemployment rate and the the level of over indebtedness among consumers is almost more than half of active credit consumers and that means more credit consumers are in arrears. There are ways for one to determine how their income is spent and asses whether or not they are over indebted.

UNDERSTAND:

•  YOUR GROSS INCOME

This is the amount you get before deductions and it is liable for deductions towards the South Africa Revenue. Understanding your gross income is really important as you don't want to fall under the illusion that you have a lot of money at your disposal.

• YOUR NET INCOME

This is the income left after SARS tax deductions and is still liable for deductions such as the Pension Fund, Medical Aid etc. Deductions are usually stated in the employment contract.

• YOUR DISPOSABLE INCOME

After all your deductions you are left with your Disposable Income. This is the amount that reflects in your account and expenditure of these funds is your responsibility. This is where careful expenditure is needed.

Having an understanding of the above is critical as the next step will be the DISCRETIONARY INCOME. This is the amount left after paying off everything. If your Debt repayments or monthly installments are over/greater than your Discretionary Income, there is a problem. If you manage to pay some and not all of your Creditors that's an indication you are over indebted as well.

There are ways in which you can manage and and get yourself out of DEBT

1. Buy what you need, not what you want
2. Brain storm on ideas as to how to save on living expenses
3. Seek the service of a Debt Counselor and get help in managing your accounts