"The middle-class is collapsing under debt" - Maya Fisher-French

The middle class cant cope with debt in South Africa

"Consumers applying for debt review are spending on average 62% of their take-home pay to service debt. However, for consumers earning R35 000 or more per month, this average figure increases to 71%. The middle-class is collapsing under debt..." - Finance Journalist, Maya Fisher-French on X(formerly Twitter)

How much must you earn to be considered to be middle class in South Africa?

According to this image sourced from UCT Liberty Institute/ NDIS (2017), middle class consumers earn between R22 000 - R40 000 per month and make up 8% of the total population.

* According to Fisher-French, this image was published in 2021. 

In an article published by BusinessTech, middle income consumers (households earning between R5000 -R20 000) are losing about R10 000 each month because of inflation and salaries that have not been able to keep up. 

This financial strain is causing many middle-class families to rely on credit cards and loans to make ends meet, leading to a cycle of debt that is difficult to break. With the cost of living constantly rising and salaries not increasing at the same rate, it is becoming increasingly challenging for middle-class individuals to maintain their standard of living.

The pressure of debt and financial instability is taking a toll on the mental and emotional well-being of many middle-class South Africans. The constant worry about money and the fear of not being able to provide for their families is causing stress and anxiety for many.

How much are South Africans spending on debt?

According to the latest Credit Stress Report by Eighty20, almost half of a South African's salary is spent on paying debt, with the average proportion of monthly payments to net earnings for all South Africans standing at 47%. Within the middle class, this percentage escalates to nearly 80%, showcasing a 14.5% surge over the past year.

According to the report, middle class consumers are spending the most of their salary on financing their debt. 

"The Middle Class spends nearly 80% of their salary servicing debt"- Credit Stress Report by Eighty20

In Q4 in 2023, middle class consumers took on a lot of debt. The amount of new loans increased by 9.2%. Vehicle Asset Finance loans increased by 22% and retail loans increased by 15.6%. Unsecured loans increased by 8.6%. 

There is help for middle class consumers who are spending too much on paying their debt

If you find you are someone that is spending way too much on paying your debt, here's a few things you should know:

1. You definitely are not the only one struggling. Many South Africans find themselves in this crippling situation.
2. There is a way out for you. You don't have to live paycheque to paycheque, barely making ends meet. 

The way out is with debt review at Meerkat. Debt review, also known as debt counselling, is a legal debt relief programme that can help South Africans struggling to make their monthly debt repayments. 

The first thing you would need to do is apply. Thereafter a registered Debt Counsellor will conduct a financial assessment to ensure that you are over-indebted (spending too much on servicing debt). 

Once the Debt Counsellor has determined this, they can work out a new, reduced affordable monthly repayment plan for all your debt. This is done by consolidating all your debt and negotiating with your creditors for a reduced interest rate on your loans. The result? Often reduced interest rates on your loans and one reduced affordable monthly instalment for ALL your debt. 

We can reduce your monthly debt instalment by up to 50%, giving you immediate relief from your debt repayments!

This new repayment plan is sent to the Court and protects any assets you may have from repossession. Assets here refer to your home and your car you may have. 

Once you have paid up all your debt and completed the debt review process, you will be issued with a Debt Review Clearance Certificate. 

Beware of scams related to debt review removal

If you are already in the debt review process, the only way you can get out of debt review is when all your debt has been paid up. There is NO such thing as early debt review removal or free debt review removal. Once you've started the process, you have to finish it to get out of it.  

At Meerkat, we offer debt review removal services but only people who have paid up all their debt are eligible to apply. 

Want to know more about debt review removal? Read this blog post. 

Who is Meerkat?

Meerkat is a financial wellness company that wants to help South African consumers do MORE with their money. We've been voted as one of The Top 10 Large Debt Counsellors in the country. 
Registered Debt Counsellor NCRDC 2613.