Covid-19 and a struggling economy has placed huge financial strain on middle class South Africans, with many dropping into lower income brackets over the last year.

Citing credit statistics, wage data and unemployment figures from the period between 1 October 2020 to 31 March 2021, a recent study said that overdue debt balances continue to increase, with a R33-billion increase seen in 2020 alone.

Sebastien Alexanderson, CEO of National Debt Advisors (NDA), says that the findings from the Transaction Capital study are extremely concerning, especially considering that we are an already indebted nation with a dismal track record in terms of debt.

“According to Statistics South Africa, about half of South African families are considered poor, while about 30% are considered working to middle class. Furthermore, Transaction Capital’s research also stated that 34% of households in South Africa are forecast to fall out of the middle-class. This is further emphasised by wage data, which shows fewer South Africans have an income of over R22 000 per month – while significantly more have less than R8 000 per month.

“It seems that people living on the bare basics, and who were already experiencing hardships before the first lockdown of 2020, have been less affected than middle and upper class,” says Alexanderson.

He says that many people accepted the payment holidays offered by banks, but this relief was temporary and the distress continued when things returned to normal.

“It isn’t a matter of income. How much you earn is only important in terms of how much you spend – and if your expenditure is consistently more than your income for months at a time, then you should consider getting professional help.”

Alexanderson says that too often people deny the reality of their situation and leave it until it’s too late to find any viable solutions.