Debt counselling companies Debt Rescue and DebtBusters urge consumers to draw a budget and spend finances wisely to avoid getting into more debt in January.
Neil Roets, the CEO of debt counselling company Debt Rescue, said that January is one of the most challenging months for South African consumers, with many finding themselves under immense financial strain. “The festive season often leads to overspending on gifts, travel, and celebrations, leaving little room for financial flexibility. This is compounded by the fact that many employers pay salaries earlier in December, creating an extended period until the next paycheck at the end of January.”
Roets added that for families already stretched thin, this long gap can be financially devastating. “Adding to this is the reality that many South Africans no longer receive year-end bonuses, which historically provided a much-needed financial cushion. Without this extra income, consumers are left to rely solely on their regular earnings, which are often insufficient to cover the costs of both holiday spending and the unavoidable expenses of the New Year.”
Roets said that for parents, January is particularly taxing due to back-to-school expenses such as school fees, uniforms, stationery, and transport costs. “These are often non-negotiable and must be paid upfront, placing further strain on already overburdened budgets. The rising cost of living exacerbates the situation. Escalating food prices, higher fuel costs, and annual increases in subscriptions all take their toll. For many households, this combination of factors leaves little room for essential living expenses, let alone repaying debt, leading to buying essentials such as food on credit.”
Roets added that over-indebted consumers face even greater challenges, as monthly repayments to creditors consume a significant portion of their income, creating a vicious cycle of financial hardship. “While the financial pressures of January can feel overwhelming, this period also provides an opportunity to make meaningful changes.”
Roets said that to better manage finances in 2024, consumers should focus on creating a realistic budget that prioritises essential expenses and avoids unnecessary spending. “It is also the best way to establish if your budget has already been cut to the bone, and you are possibly over-indebted. By planning carefully, prioritising essential expenses, and seeking help when needed, consumers can navigate these challenges and work toward a more secure and sustainable financial future.”
Benay Sager, Executive Head at DebtBusters, said that they are expecting some expenses to go up during the course of the year, particularly with the volatility of petrol and related items. “In April or July, depending on how you buy your electricity, the electricity price will also go up – so if you have a bit of extra money this month and you use pre-paid electricity, it would be a good tip to buy now, as it usually lasts 12 months and you won’t run out before the price increase.”
Sager added that if you’re paying for school fees, make sure you’re choosing the right option to pay – whether that’s quarterly, monthly, or in a lump sum, depending on what discounts you might get. “Of course, back-to-school time also means a lot of stationery requirements. There are usually good deals to buy in bulk, and if you buy for multiple people, you might get those discounts. Often in January, insurance and related costs and premiums also go up, so if yours is going up, make sure you evaluate alternatives now is a good time to look at those.”
Sager said that from a macro perspective, our expectation is that interest rates will hopefully go down again a couple of times this year – either in January and March, or in March and May. “ It would be good to anticipate that the interest rates – beyond two further cuts – are not going to go down much more than that, and if you’re paying for a bond or a vehicle, keep that in mind and make sure you’ve got the right cash flow to service those debts. January is also always a great time – at the beginning of the year – to talk to someone who can give you debt advice.”
PERSONAL FINANCE