Changing consumer behaviour

should be a temporary solution.

“When consumers are paying more than 20% of their income towards debt, we consider that to be a danger zone or red flag.

“Alarmingly, 72% of all respondents need 30% or more of their take-home pay to repay debt. More worrying is that 57% are spending more than 40% of their take-home pay to repay debt and we consider that unsustainable,” Sager said.

The Old Mutual Savings and Investment Monitor 2022 shows that as people buckle under the pressure of inflation, increasing interest rates and rising fuel costs, they are taking rigorous action to manage their money by adjusting their expenditure.

At 7.4%, inflation is at a 13-year high. Koketso Mano, an economist at FNB, said headline inflation was expected to remain elevated for the rest of the year, reaching a peak in the fourth quarter.

Annabel Bishop, Investec’s chief economist, said inflation would most likely peak at 7.8% year-on-year in October, although she expected a slightly lower average inflation of 6.9% for the year.

“This will negatively impact consumers, with a 50bp [basis points] hike in interest rates expected in July, although the risk is growing for a 75bp lift instead,” she said.

Investment strategist at Old Mutual Izak Odendaal pointed to a general sense of post-Covid optimism in January, which had rapidly been outweighed by high inflation, eating into consumers’ ability to spend.

Old Mutual’s survey shows 66% of consumers are using loyalty rewards programmes, 30% say they have cut down on domestic help and 28% have cancelled their gym contracts.

Vuyokazi Mabude, the head of knowledge and insights at Old Mutual, said “polyjobbers” – those with multiple income streams – had increased from 47% last year to 51% this year.

According to the Money-Stress Tracker, one in six (14%) respondents said they had not taken action to alleviate financial stress because they didn’t know what to do or needed more time.

Psychotherapist and transactional analyst Diane Salters says people in financial trouble would probably feel shame and fear and not be able to think clearly.

She said those in “freeze mode” would likely feel stuck and do nothing. Those in flight mode would say they didn’t need debt counselling despite the numbers indicating they did. Or they may be ready to flee or fight the debt collector, their partner or spouse or even their debt counsellor.