THE KNOCK-ON EF­FECT OF OUR SQUEEZED POCK­ETS

CityPress - - Business -

As I have been trav­el­ling away from home a fair amount this month, I filled up my car for the first time since the two price in­creases. I am writ­ing this col­umn as ther­apy to re­cover from the shock. My tank now costs me in ex­cess of R1 000 to fill. Ad­mit­tedly, my fuel tank is 70 litres, but, as I fill up on av­er­age twice a month, – that is a lot of money. I then pulled out my cal­cu­la­tor and worked out that from July 4 it costs me R1.50 a kilo­me­tre in fuel alone. Driv­ing to meet­ings now has a real price tag.

But that has not been the only price shock re­cently – I still can­not work out how two pack­ets of gro­ceries cost me R1 000. And the price of but­ter – don’t even get me started on that one.

And then there is the cost of eat­ing out. This is some­thing I do a lit­tle too of­ten. Partly due to my weekly date night, but I am also in the habit of tak­ing my boys out for meals. As they are now adult size, their food usu­ally ends up be­ing the MAYA FISHER-FRENCH most ex­pen­sive on the bill. I have been watch­ing menu prices in­crease strato­spher­i­cally and feel­ing a bit queasy at the end of the meal when the bill ar­rives. But the time has now ar­rived when I need to be hon­est about how much we are re­ally spend­ing and start en­forc­ing the bud­get, which I have been a bit slack with re­cently.

In fact, there are quite a few con­ver­sa­tions I am go­ing to have to have with var­i­ous ser­vice providers about what I can or can­not af­ford. The knock-on ef­fect of my cut­ting back will have im­pli­ca­tions on many small busi­nesses and this is es­sen­tially the prob­lem with the econ­omy. The price hikes felt by con­sumers will force fur­ther cut­backs es­pe­cially on non-es­sen­tial items. Just as small busi­nesses and even large re­tail­ers are feel­ing the pinch of their own in­put costs ris­ing, their cus­tomers will be buy­ing less. This is not good news for any­one, as re­trench­ments are likely to con­tinue.

The lat­est credit sta­tis­tics from the Na­tional Credit Reg­u­la­tor re­veal that credit ex­ten­sion, which has kept some house­holds tick­ing over in dif­fi­cult times, is tight­en­ing. De­spite an in­crease in the num­ber of ap­pli­ca­tions for credit, last quar­ter there was a de­crease in the num­ber of ap­pli­ca­tions ap­proved – with only about 51% of credit ap­pli­ca­tions be­ing ap­proved.

The new af­ford­abil­ity rules will have a big ef­fect on loans ap­proved, but con­sid­er­ing that th­ese are fairly ra­tio­nal guide­lines, the re­al­ity is that nearly half of the credit ap­pli­cants could not af­ford the loans.

What we are fac­ing is a co­nun­drum – we should cut back fur­ther which, of course, has a neg­a­tive ef­fect on those ser­vices we cut back on, and some house­holds are al­ready cut­ting back as much as they can. We should look at al­ter­na­tive ways to gen­er­ate in­come (and no I don’t mean Bit­coin) but as ev­ery­one is cut­ting back it gets harder to sell your skills. A com­bi­na­tion of some cut­ting back and some in­come gen­er­a­tion could be suf­fi­cient to keep heads above wa­ter, but at the very least we need to start cut­ting back on debt. Pay­ing in­ter­est and fees is the most unproductive spend­ing we do. Just imag­ine how much eas­ier it would be to cope with price pres­sures if you didn’t have those loan re­pay­ments each month.

So, even as we feel the squeeze, make a de­ter­mined ef­fort to put a bit ex­tra into those debt re­pay­ments each month and please don’t touch the credit card (un­less it is pre­paid).

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