SA’s middle class debt squeeze: Even those earning at the top end are struggling, says debt counselling company

For years the middle class in South Africa was seen as the safe zone - you had a steady job, could afford decent middle income housing, maybe drove a financed car and took a holiday now and then.

But that picture has changed, particularly since the devastating impact of the COVID pandemic, says debt counselling company National Debt Advisors (NDA).

Even people at the upper level of the middle class, earning say R50,000 a month are feeling the squeeze right now, says NDA's Samantha Moyana.

RELATED: High salary, empty bank account: how success turns into financial quicksand

She says consumers in this bracket typically spend roughly 74% of their take-home pay to pay off debt.such as credit cards, car finance and personal loans.

This can be attributed to the increasing cost of living as well as simply borrowing too much money.

"With such a high affordability you also qualify for a lot of credit. These rising costs squeeze the middle class from both sides and debt ends up filling the gap."

"For example, you have a set salary from which you end up getting yourself a home loan, a vehicle you need to finance, you're sending your children to a private school... All of those expenses add up at the end of the month and they are expenses that you need to pay for on a monthly basis."

As the company says, a big part of the problem is lifestyle creep - as income increases, the spending follows on for instance a bigger home, a second car or better school.

Practical steps to protect your middle income household:

1. 1. Get honest about your numbers
   List your full middle class income range (salary, commission, side income) and every monthly debit order. If the numbers do not make sense on paper, they will not magically work in real life.
2. 2. Cut lifestyle costs before missing payments
   Downscaling from certain middle income housing options or trimming luxuries is emotionally hard, but less painful than a judgment, repossession or a ruined credit record.

1. 3. Build a small emergency buffer
   Even R500 to R1,000 per month into a separate savings pocket helps absorb shocks and reduces the need for more credit.
2. 4. Avoid new credit as a solution
   Using loans to keep up a middle class lifestyle is like pouring petrol on a fire. It looks like help for a month or two, then the flames get higher.
3. 5. Talk to an expert before it becomes a crisis
   If you are already juggling arrears, collection calls and sleepless nights, it is time to talk to a professional.

Scroll up to the audio player to listen to the full conversation