Why people get into debt

Nearly 30 000 debt judgments involving a total of R388.6 million were passed in South Africa in April according to Statistics South Africa.  Some 72 003 summons for debt were also issued in the same month.

South Africans are increasingly pressure as the debt crunch catches up with them. According to the National Credit Regulator, 189 000 joined the ranks of bad debtors in the first quarter of this year.

There were 20.08 million credit-active consumers at the end of March. Those with bad debts increased stood at 9.53 million.

Despite this appalling picture there were 15.26 million enquiries from consumers seeking credit during the period.

The question, most people would want to know is: Why do people get into debt?

Author Danie Vorster says one of the major reasons why people get into debt is that they live their neighbours’ lives. They compete with people without knowing what the other person earns or how the other person sustains him or herself.

People land in debt because they are obsessed with success. We all want to be successful or at least to be seen to be successful.

“It is often not the person from a wealthy background who is obsessed with success, but rather the one from a modest or poor background,” Vorster says in his book: Debt-trap or Debt-free.

Vorster says other reasons why people get into debt are:

• Greed, bad habits and weak self-discipline.
• Some people live lifestyles that they cannot afford because they want to be seen as wealthy.
• Living to other people’s expectations. Some people get into debt to live the kind of lives that people expect them to live and where they expect them to live.
• Hunger for power and recognition.  These people want to use money to gain power and to be recognised as the rich and end up in debt.
• Weak self esteem.  Some people think so lowly of themselves that they surround themselves with all sorts of tangible possessions to give the impression that everything is OK.
• Unhappy or deprived childhood. Some people who grew up poor surround themselves with all sorts of things - houses, cars- bought on credit to give the impression that they have made it in life.

The major problem with debt, Vorster says, is that it turns you into a slave. You are always one step behind, “.using today’s limited resources to pay off yesterday’s long forgotten privileges”.

Our book: How to buy a house for half the price has a full chapter on getting out of debt.