Financial and mental wellbeing

The month of October has been declared Mental Health Awareness Month with the objective of not only educating the public about mental health but also to reduce the stigma and discrimination that people with mental illness are often subjected to.

There are many contributing factors that affect one’s mental health. Some of us do not see it coming and those that do acknowledge the condition often do not treat this adequately.  The inevitable consequences are that it may impede your capability to efficiently function at work, your daily life at home and with your social life. Should you believe that you may have a mental health condition, it would be prudent that you engage with a medical professional.

There is no question that your mental health plays havoc with your financial acumen. The Credit Ombud have received calls from consumers who were in over their head with debt to the point that some have even threatened to take their own lives. It’s a very sad reality but financial burdens can lead to depression and anxiety. With 2020 being one of the toughest years we have ever faced, many consumers are under distress when it comes to finances. The lockdown saw many sectors having to close their doors in adherence to the lockdown regulations. Consumers who were/are affected had to make arrangements with their creditors. Unfortunately, due to the day-to-day financial strains, some consumers had to revert to unconventional ways to secure the money that they needed to cover some of their debts.

Talking about financial issues, although part of our daily lives, still appear to be a taboo topic which conjures up feelings of guilt and helplessness.  We are private creatures by nature and may not want to divulge personal financial concerns with our families, friends and our work colleagues. We want to portray the image of success and talking about how we handle our finances will distort this perfectionism. The irony is that this perpetuates the cycle of debt and we are unable to get out of the depression and debt trap.  Loss of employment or a salary cut; personal issues in the home environment, the attraction of sensational marketing and the appeal of mesmerizing sales contribute to debt.  Consumers must remain pro-active in acknowledging to themselves that they do have debt.  Ignoring your debt obligations is a recipe for disaster as the debt does not disappear and will certainly accrue additional interest and costs.  You must be principled to take control of your finances by recognizing your income and your spending patterns.  If you are unable to explain your financial challenges with someone you trust, approach a financial expert to let you have independent advises.  While it is understandable that approaching a financial expert may not always be plausible, there are several easy to remember key points that you may consider.

  1. Pay your accounts on time every month;
  2. Pay the full instalment owed each month;
  3. If you are unable to make a payment due to unforeseen circumstances, talk to the credit provider to make alternative arrangements to pay back what you owe;
  4. Never buy on credit without knowing if you can afford the repayments;
  5. Try to keep credit repayments to a nominal percentage of your income;
  6. Stay informed about your personal credit information. You may obtain your FREE credit report, every twelve months from the credit bureaux;

The Credit Ombud also urge employers to put together wellness programs to assist employees with their financial wellbeing. As an educator to the public in matters pertaining to the credit industry, we are renowned for providing helpful financial/credit tools that will assist consumers to better understand and handle their own personal finances. Credit is a tool which is meant to be used to mend, not to pull apart one’s life. Lets’ learn to use it for what it’s intended for.

The Credit Ombud offers the following additional advice to consumers who are financially stressed:

  1. Budget and Plan

Prepare a monthly budget, where you can identify your income and expenses. The budget is a plan and it is important to stick to this plan to bring you to financial wellness. Remember to include an item for savings in the budget as well as a year-end treat for yourself;

  • Pay off and close some accounts, if you can.

Identify if there may be some accounts that you could pay off and then close those accounts. Generally, it is best to start paying off the smallest accounts.  As you find the accounts are closed, the progress will make you feel better;

  • Do not hide

When we are stressed due to our financial situation, the tendency is to avoid the calls or SMS’s from our credit providers and to hide. It is better to speak with our credit providers and make suitable plans to deal with our debts. It remains to your advantage to consistently update your address and contact information with credit providers.  In the event that you cannot be located because you have moved house or changed your telephone details, the credit provider would appoint tracers to track you.  This leads to additional collection costs and interest charges;

  • Do not ignore a letter of demand for payment or a summons to appear at court due to non-payment.  Should you ignore a summons and judgment is taken against you, the credit provider would have thirty years to collect on the outstanding debt.
  • Get help

If your situation remains desperate you can seek help from a debt counsellor. Please check that the debt counsellor is registered with the National Credit Regulator. Debt counselling is a legal measure to provide relief to consumers who are over-indebted and are struggling to meet all their financial commitments. Assistance from a debt counsellor include, among others, negotiations with credit providers to restructure your debt and reduce the monthly payments to credit providers.

These are important steps to take to nurse consumers back to financial wellness and a stress-free life.