John Vaughan (Financial Advisor) @ Lucid Living
We are plagued by an endless barrage of advertisements and marketing that influence and dictate our desires. We are led to believe that we must acquire the latest and greatest items, from cloths, furniture, electronics to motor vehicles and homes. We are led down the garden path, by the lure of greater happiness, status and convenience. We abandon our greatest asset, discriminative thinking, and succumb to powerful marketing or social pressure. We satisfy our wants and not our needs.
When this pattern is entrenched in our psyche, there is no discriminative thinking (i.e. of needs vs wants). Like a programmed machine, we automatically fulfill all our desires on the principle of wants. Inevitably, we find that our wants are insatiable and satisfaction thereof is impossible. This realization becomes most apparent in a financial context. Fulfilling our wants, lead to financial ruin.
In the case of 18,21 million (credit active) South African’s our wants are financed on credit. We use borrowed money to satisfy our desire for material acquisition. When we borrow more than we can afford to pay-back we end up being over-indebted. Over-indebtedness leads to repossession of the very assets you coveted, the anxiety of legal action and a smeared credit reputation.
You are forced to re-program old behavior patterns. You come to terms with the fact that satisfying your wants never yielded the happiness or higher status it promised. Humbled by the reality of your awakening and compelled to accept, that it is your needs that you must satisfy and not your wants. This is the reality of 8,37 million credit active consumers with negative credit ratings (blacklisted).
The number of blacklisted consumers has consistently risen over the past 3 years, as reflected in the Credit Bureau Monitor (Q1, 2010) compiled by the National Credit Regulator. In the period Q1 2008 to Q1 2009, there was an increase of 4%. A compound increase of 3,6% was experienced in the period Q1 2009 to Q1 2010. These are the measurable results of consumers who’s appetite for credit (to satisfy their wants) exceeded their healthy consumption capacity.
Unfortunately the majority of people in this scenario have not as yet accepted the reality of their situation. They choose to ignore it and hope that it will magically disappear or fall into a debt-trap, by accessing further credit to meet monthly payments (the proverbial “borrow from Peter to pay Paul”). Unfortunately, neither will rectify the situation.
What To Do Next?
- Take a very honest look at your situation;
- Discriminate which purchases were driven by needs and wants;
- Come to terms with surrendering the “wants” (i.e. selling or surrendering certain assets);
- Prioritise your needs (i.e. which credit obligations are essential);
- Get help from a credit manager or debt counselor to negotiate restructure terms with your creditors.