The Impact of Debt on

Employers and Employees

MANAGING RISK

NCA - Introduced in 2007

Purpose – to protect the man in the street from reckless lending

“Boer maak ‘n plan”

Lenders - developed more efficient tools to speed up the administration of the loan process

Result - increase of unsecured loans over past 2 years = 53 %

1994 – 2013 - Household debt up from 56% – 75 % = 34 %

National Credit Act

53 %

Credit active consumers: 20,21 million

Almost 49 %with

Debt problems

4Unlocking Property Ownership

Status QuoDebt Crisis in South Africa

20,21 millioncredit active consumers:

62%Arrears & debt

impairments

38%No arrears

14% 1 – 2 months in arrears

21% 3 – 4 months in arrears

26 % adverse or judgments

Case Study No 1

• Mine worker @ XXX Mine

– Income R26 000 per month– PAYE etc - 2 200– Ex wife – maintenance - 2 600– Debt deductions - 20 000

Balance left R 1 200

Result - …………………….

Case Study No 2

• Police Sergeant - George

– Income + R ….…..– PAYE etc - R………..– Uniform - R ……….– Debt deductions - R ……….

Balance left R 184.00 per month

Result - …………………….

May your EXPENSES never catch up with you before you reach the  PAYDAY. 

 EXPENSES

PAYDAY

WORD WAKKER !!!!!!!!!!WORD WAKKER !!!!!!!!!!

7

8Unlocking Property Ownership

Debt

Secured - Home loans

* Security – Mortgage bond* Interest – prime + 1 – 3 %

Unsecured & Short Term

* Security or no security ?* Prime + up to 60 % per annum

* Is it really “UNSECURED”?

* Fraud & Abuse of Garnishee Orders & Emoluments

9Unlocking Property Ownership

NCR Stats 2nd Quarter 2013

LOAN LOANS GRANTEDLOAN LOANS GRANTED

10Unlocking Property Ownership

The Problem – Buying a House

First time buyers in the affordable market

Little knowledge or background

*

80%

Biggest Problems:

•Over-indebtedness

•Account Conduct

•Affordability

11Unlocking Property Ownership

The Problem – Buying a House

First time buyers in the affordable market

Little knowledge or background

*

80%

Biggest Problems:

•Over-indebtedness

•Account Conduct

•Affordability

Affordable Market:Approved vs Declined

15%Approved

85%Declined

Of the five major sources of stress, the issue of personal financial stress was rated as #1

Rated 5 times higher than health concerns

Financial Stress – Relevance to Employees?

Impact on the property market

14Unlocking Property Ownership

Access to property finance

Major Fund

* Provides funds for home loans* Outsource to lender

Lender

* Obstacle – “bad” quality of clients* 2 700 applications - 310 approved* 600 applications – 100 approved

* Relax approval criteria* Increase interest rate to “price for

risk”

15Unlocking Property Ownership

Back to the our “Own Office”

LOAN What is the impact ?LOAN What is the impact ?

Disruption of administration, emolument & garnishee orders

Frequent staff financial counselling

Absenteeism from work

Ongoing demands for access to payroll

Impact on HR & Payroll Office

17Unlocking Property Ownership

Solutions: Government Contribution

FLISP

CREDIT AMNESTY

18Unlocking Property Ownership

Solutions: I want to save the world

I want to save the world

19Unlocking Property Ownership

Solutions: Housing Education and Empowerment

• Promote as part of a holistic campaign

• Engage early

• Continue with education

This will lead to:•Empowerment•Improved :

• behaviour, dignity and integrity

•Reduction of risk

Commence with awareness and education

20Unlocking Property Ownership

Solution - Housing

21Unlocking Property Ownership

Start with the basics

Do you have a mobile phone?

How do I manage my budget?

Captures Daily, Weekly

Expenditure for:

– Food R120;

– Travel R30;

– Rent R500;

– Other expenses

In budget

Alert !!!

Capture each rand you spend

How much can you save if you replace your

most expensive debt & pay off your other debt faster?

Investigate yourmost expensive debt

Investigate -

25

IDENTIFY THE MOST EXPENSIVE DEBT FIRST

SavingsR23 500 per

year

26Unlocking Property Ownership

How to buy your own home

27Unlocking Property Ownership

Pre and Post Purchase EducationTwo programmes:

Pre-purchase Post purchase and after transfer of ownership

28Unlocking Property Ownership

Alternative Ownership structures

29Unlocking Property Ownership

Rent2buy

30Unlocking Property Ownership

Fly Solo / Partnerships?

Cannot achievethis on our ownCannot achievethis on our own

31Unlocking Property Ownership

Strategic Role Players•National Government•Local Government•Local Authorities•City of Cape Town•Financial Institutions•Property Developers•Land Owners•Estate Agency Affairs Board•Law Society•Attorneys Fidelity Fund•Corporate Entities•Private Entities•Community Leaders & Forums

But The Most Important Stakeholder Is:

The Buyer!

Our Partners and Content Contributors:

Blue Oak Credit Health Inspect-a-home 1 Call ASAP

Law Property Lightstone moneysmart

My Budget Fitness Real Estate Investor Magazine Setsmol

Education : Partners and Role Players

32Unlocking Property Ownership

ENERGYWORKS

Unleashing the Personal Power of Production

32© Energyworks / EBH / 09/13

STAKEHOLDER ENERGY

PERSONAL ENERGY

LEADERSHIP ENERGY

ORGANISATIONAL ENERGY

THE BOTTOM LINE

STAKEHOLDER ENERGYEmployees

ORGANISATIONAL ENERGY

LEADERSHIP ENERGY

PERSONAL ENERGY

Energyworks :Personal energy works right through the organisation…

©

34Unlocking Property Ownership

Conclusion – Sustainable Homeownership

CustomerResponsible, learns

to manage own finances and makes informed decisions.

Reduces the burden of debt

Lender Promotes

responsible lending

&

35Unlocking Property Ownership

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Contact Details

Meyer de Waal

M: 083 653 6975

T: 021 461 0065

E: meyer@budgetfitness.co.za

www.irent2buy.co.za www.budgetfitness.co.za www.mobile2budget.com www.consumerhousingeducation.co.za

www.flisp.co.za