The impact of debt-ridden South African consumers for many pensioners is that they have to use precious retirement capital to bail out over-indebted adult children.
Rather than dropping more life savings into a bottomless pit, parents could help their children more by showing them how to restructure their debt in a way that increases personal savings and sets them on a new, fresh path.
Blue Oak Systems has just launched their RESET application which shows the consumer what monthly savings can be achieved by structuring debt effectively, particularly expensive unsecured debt such as credit cards and store or retail cards.
Co-founder of Blue Oak Systems Theuns Hanekom says that the mistake people often make is that they take maximum consolidation loans to pay off as much debt as possible. The problem with this approach is that it does not necessarily deliver desired monthly savings which means the debtor soon needs to start borrowing again.
"Sooner or later they will hit the wall - they cannot access any more loans," he says. "What RESET does is calculate the MINIMAL loan that will have the BIGGEST impact on monthly savings. This way, the person has extra cash every month which allows them to buy groceries cash instead of on a store card, purchase a much-needed vehicle or start paying off other debt."
Hanekom says that, depending on circumstances, savings are sometimes minimal but recently one of RESET'S first clients saved R12 000 per month by taking a minimal loan of R48 000. Even a monthly savings of R2 500 per month can make a huge difference to a family. If you're paying about R8 000 per month to rent a property, an additional R 2 500 per month will allow you to buy your own house for about R 1 million.
"The debt level in South Africa is frightening, but RESET allows you the opportunity to wipe the slate clean and literally start again."