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Are We Poor Now?


For many people, the goal of having lots of money and lots of nice things consumes their thinking day and night. Even those who are just scraping by each month commonly long to earn more, spend more and have more.

It makes sense that, if being rich is a goal most people have, their fear is being poor. Generally, poor people are looked down on in society, and treated badly. The impression is that if you work hard, you will earn more and have more. Therefore, if you are poor it means you are lazy or unskilled?

This is, of course, not accurate, it is an idea that permeates society and since wealthy people are treated better, it makes sense that many want to at least look rich, or enjoy some of the things rich people have.

Many consumers will go to great lengths to appear to have wealth, even if they do not. It is not uncommon to see someone coming from their manual labour job, changing into smart clothes for the trip home. They want to project an illusion of wealth, even if it is not true.

People drive cars they cannot afford, buy designer brands, eat out and engage in retail therapy when they feel down, all on credit, of course!


Credit is readily available these days, and many retailers are totally dependent on offering credit and operating as a credit provider, just to stay in business and make a profit. People around the world make use of credit to get things immediately, which will take years to pay off. It provides instant gratification, and is preferred by most, to saving up for things over time.

The result is that millions of South Africans have been living well beyond their means for years. Most are totally dependent on their credit just to make it from one month to the next.

Over time, most people’s debt grows and grows as they borrow more, to make ends meet and keep up with the rising cost of living. Eventually, consumers are making use of credit just to pay for their next meal. At this point they are so deep in debt that most of what they earn each month, has to be thrown into their debt repayments. Many find that they simply cannot keep up.

Debt review is designed to break this cycle.


When entering debt review, consumers are asked to switch from a credit lifestyle to a cash lifestyle. It is not easy, and many people fail because of the bad financial habits they have fallen into.

As opposed to simply spending on credit, consumer in debt review are asked to budget, and live within their means. This is typically something they have not done for years, or perhaps ever.

Since there is a stigma attached to not living large, and not spending to look wealthy, most people hesitate to tell their friends that they are under debt review. This can lead to the awkward situations when friends want to
splurge on activities or services that would blow your new budget. If you say “no thanks” they may think that you have run out
of money. You may even be left out of fun activities by those still living on credit, you have become the ‘poor friend’.

Sometimes your own children will ask you why they cannot have all the toys and things they had before.

Looking up at you they may ask: Are we poor now? It is a good question.
Does being in debt review mean that you are poor?


South Africa has both billionaires and those who have no income, relying on the R350 grant to afford a few meals each month.

Unemployment is at one of its highest levels ever. This means that there are many poor people around us each day. These people cannot spend because they have no money. So, the definition of poor is: you do not have what you need to cover your basic costs.

But consider for a moment people living on credit. These people are spending money they have not yet earned. They are spending more than they have on a regular basis. This, in fact, means they are getting poorer, every time they spend. Due to credit access they have the ability to spend well beyond their earnings. They can spend beyond R0, they have minus money.

Imagine if you only had 30 pre-packed meals available to you for a month – one big meal pack for each day. But at the start of the month you decide to scoff down more than one meal a day. You eat 2 meals a day. For the first 15 days you feel happy no doubt, but eventually you will run out of food. You are now in trouble, with half the month to go, the cupboard is empty.

This is essentially what using money you have not yet earned is like, it’s not smart. Some compare using credit to selling your future self, to pay for things now. You enslave yourself for extra cash now. It is something to
think seriously about.

While there are many poor people around us, some of the poorest may actually be driving luxury cars and living in fancy houses, all of which are really owned by their credit providers.


When you enter debt review, your Debt Counsellor helps you set a realistic budget figure for each month. This is the amount that they calculate that you can live on while under debt review.

Now, it may require you to make some big changes to how you have been doing things. After all, people who have been using credit extensively before debt review have commonly been living well beyond their actual means*. Debt review may mean changing where you live, shop, eat, who you spend time with and where. It can impact every aspect of your life.

It is much like trying to have a healthy balanced diet: You want to balance what you eat, against the energy you use. The way to do this is to change the way you shop and exercise and adjust what you eat. Finding the right balance will depend on you and your goals.

The goal for those in debt review is to spend within their budget, which also includes setting some funds aside each month for upcoming expenses, or for unexpected expenses. It also includes never missing a payment so that your debt is progressively shrinking each month.

* Some people however just experience an unexpected negative turn of events such as losing their job or sudden medical bills. This is not living beyond your means.


South Africa has many millionaires and even billionaires who are super rich. These people break the mould and are unusual, they are the 1%, and they fascinate us. They really are a small minority. Which means that you are far more likely to end up in the 99% with the rest of us.

The majority of the 99% around us, from colleagues at work to family and friends, generally owe the bank most of what they earn each month. This is because they are trapped using more and more credit to make ends meet. Some of them are locked into debts that will take decades to repay.


Some bond owners will pay back 5 times the bonded amount over the years, and will probably need to use up to 5% of the bonded amount to maintain their homes each year.

Over a 10 year period, that’s 50% of the bond price. Over a 20 year period, it is a whole other bond, just to maintain their property.

This could leave them with no other means of saving or investing, and lock all their future wealth into the property they live in. Let’s hope property prices in that area are doing well in a few decades, and they can make
more than what they spent.

Property is a tricky game. The only ones guaranteed to win, are the banks.


People who are spending more than they earn are slowly digging themselves deeper and deeper into a pit.

They may try to borrow more and more … which only makes the hole deeper. Sure, they may appear to have a nice lifestyle on the surface, but they are slowly sinking (and they can probably feel it when they try to sleep at

By contrast those who have entered debt review and adjusted their spending habits, are living within their means. Even better, they are slowly paying off every single cent they ever owed to anyone. They are quickly becoming
debt free, very few people can say that these days.

In a world full of people enslaved to debt, perhaps not owing anything to anyone is the new form of being rich.


Debt Counsellors will help you prepare necessary court documents.

You will need to sign at least one document for the courts saying that you know you are under debt review and want to go ahead with the process.

This document will need to be stamped by a Commissioner of Oaths (E.g. at a police station).