Advice and money
Before making investment decisions, only 32 percent of people said they would consult a financial advisor.
This was followed by a spouse or partner at 21 percent, the internet at 16 percent, family and broker both at 10 percent, newspapers at six percent and friends at three percent.
“This is a real concern for the advisory industry which needs to ask why people are not looking for professional advice,” noted Fisher-French.
Consumer credit has become the poisoned apple of the 21st century. For most, the temptation of its spoils has been too alluring to resist, believing the benefits of using credit to finance a lifestyle they cannot actually afford, out-dazzle the drawbacks. Unfortunately, the truth and harsh reality of this fatal assumption is now coming home to roost, as millions fall into the clutches of overwhelming debt and find themselves struggling to make ends meet.
Over the last 60 years, the growth of the global economy has relied heavily on credit consumption, propping industries and entire nations up on a shaky and unsustainable foundation. But, while the world was enjoying the heyday of credit induced economic growth and gluttonous living, no-one was asking, “What can go wrong?” Well, now we know the answer to that question and the future financial security of individuals, households, industries and entire nations, doesn’t look pretty.
The overwhelming majority of economically active people around the world have become dependent on credit to finance their lifestyles. “Buy now, pay later” has become a spending culture and a way of life for most and it’s the reason so many are debt ridden and struggling to make ends meet each month.
Since most people can’t afford to pay cash for all the things they want, affordability has now become a measure of how much access to credit they have. As a result, marketers and salespeople have become dependent on the ability and willingness of consumers to buy things on credit in order to hit their sales targets.
To enable customers to buy on credit, most retailers offer credit card payment facilities and many provide their own credit facilities through charge accounts and instalment sale agreements. But these facilities are only useful as long as customers are willing to get into debt to buy their products and services.
Right now, 60% of the credit active population in South Africa is drowning in debt and desperately looking for a way to stay afloat. Given this shocking statistic, it comes as no surprise that many people are turning to debt consolidation as a quick and compelling solution to an urgent and serious problem.
In theory, debt consolidation appears to be an ingenious and simple solution by consolidating high interest, short term debt into a lower interest, longer term debt… and ‘hey presto’ your monthly repayments are reduced and you can breathe again! So surely, it must be a good idea!
Good ideas gone bad.
Sometimes well-intended ideas have unintended consequences with disastrous effects. A great example of this was the introduction of alcohol prohibition in the early 1900’s. The idea was driven by moralistic intentions, yet it gave rise to widespread bootlegging, organised crime and moral decay.
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